SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

                          Commission File No. 000-19235

                          SUMMIT FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)

   SOUTH  CAROLINA                                        57-0892056
(State  or other jurisdiction                                   (I.R.S. Employer
   of  incorporation  or                                        Identification
    organization)                                                       No.)
     
                  P. O. Box 1087, 937 North Pleasantburg Drive
                        Greenville, South Carolina  29602
          (Address of Principal Executive Offices, including zip code)

                                 (864) 242-2265
              (Registrant's Telephone Number, Including Area Code)

           Securities Registered Pursuant to Section 12(b) of the Act:
                                      NONE

           Securities Registered Pursuant to Section 12(g) of the Act:
                 Title of Class:  COMMON STOCK, $1.00 PAR VALUE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months  (or  for such shorter period that the registrant was
required  to  file  such  reports),  and  (2)  has  been  subject to such filing
requirements  for  the  past  90  days.
YES   X     NO
    ---

Indicate  by  check mark if disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-K  is  not contained herein, and will not be contained, to the
best  of  registrant's  knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form  10-K.          X
                  ----

The  aggregate  market  value  of  voting  and  nonvoting  common equity held by
non-affiliates  of  the Registrant computed by reference to the closing price of
such  stock  as  quoted  on the NASDAQ National Market, as of March 10, 1999 was
approximately  $22.7  million.  For  purposes of the foregoing calculation only,
all  directors  and  executive  officers  of  the  Registrant  have  been deemed
affiliates.


As  of  March  10,  1999, there were 3,047,044 shares of the Registrant's Common
Stock,  $1.00  par  value,  outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

(1)     Portions  of the Registrant's Definitive Proxy Statement for 1999 Annual
Meeting  of  Shareholders  is  incorporated  by  reference  in  Part  III.
<PAGE>
                                     PART I


NOTE  REGARDING  FORWARD-LOOKING  STATEMENTS
      Summit Financial Corporation's ("the Company") Annual Report on Form 10-K,
specifically  certain  of  the  statements  set forth under "Item 1 - Business",
"Item  7  -  Management's  Discussion  and  Analysis  of Financial Condition and
Results  of  Operations",  "Item  7A  - Quantitative and Qualitative Disclosures
about  Market  Risk",  and  elsewhere  in  this Form  10-K,  and  the  documents
incorporated  herein  by  reference,  contains  forward-looking  statements,
identified  as  such  for purposes of the safe harbor provided in Section 27A of
the  Securities  Act  of  1933,  as  amended,  and Section 21E of the Securities
Exchange  Act of 1934, as amended.  Such forward-looking statements are based on
current  expectations,  estimates  and projections about the Company's industry,
management's  beliefs  and certain assumptions made by the Company's management.
Words  such  as  "anticipates",  "expects",  "intends",  "plans",  "believes",
"estimates",  or  variations of such words and similar expressions, are intended
to  identify  such  forward-looking  statements.  Readers are cautioned that any
such  forward-looking  statements  are  not guarantees of future performance and
involve  a  number  of  risks  and  uncertainties, and that actual results could
differ  materially  from  those  indicated  by  such forward-looking statements.
Important  factors  that  could  cause  actual results to differ materially from
those  indicated by such forward-looking statements include, but are not limited
to,  the following:  (1) that the information is of a preliminary nature and may
be  subject  to  further and/or continuing review and adjustment; (2) changes in
the  financial  industry  regulatory  environment; (3) changes in the economy in
areas served by the Company and its subsidiaries; (4) the impact of competition;
(5)  the  management  of  the  Company's  operations;  (6) changes in the market
interest  rate  environment  and/or the Federal Reserve's monetary policies; (7)
loan  prepayments  and  deposit  decay  rates;  and  (8)  the  other  risks  and
uncertainties  described  from  time  to  time in the Company's periodic reports
filed  with  the  SEC.  The  Company  disclaims  any  obligation  to  update any
forward-looking  statements.


ITEM  1.     BUSINESS

GENERAL
     Summit  Financial  Corporation  (the  "Company") was incorporated under the
laws  of the State of South Carolina on May 26, 1989. The Company, headquartered
in Greenville, South Carolina, is a financial institution holding company formed
under  the  Bank  Holding  Company Act of 1956, as amended.  Subsidiaries of the
Company  are  Summit  National  Bank  (the  "Bank",  "Summit"),  a national bank
organized in 1990, and Freedom Finance, Inc. (the "Finance Company", "Freedom"),
a  consumer  finance  company  organized in 1994.  In 1997 the Bank incorporated
Summit  Investment  Services,  Inc.  as  a wholly-owned subsidiary.  The Company
engages  in  no  significant  operations  other  than  the  ownership  of  its
subsidiaries.  The  Company conducts its business from three banking offices and
eleven  consumer  finance  offices  throughout  South  Carolina.

     The  Bank  targets  individuals and small-to-medium-sized businesses in the
Upstate  of South Carolina that require a full range of quality banking services
typically  provided  by the larger regional banking concerns, but who prefer the
personalized service offered by a locally-based institution.  The Bank currently
has  its  headquarters  and  three  full-service branch locations in Greenville,
South  Carolina.  Summit  provides  a  full  range  of deposit services that are
typically  available  in  most banks and savings and loan associations including
checking  accounts,  NOW  accounts,  individual retirement accounts, savings and
other time deposits of various types ranging from daily money market accounts to
longer-term  certificates  of  deposit.  Deposits  of the Bank are insured up to
$100,000 by the Federal Deposit Insurance Corporation (the "FDIC").  The Company
has  no  material concentration of deposits from any single customer or group of
customers.  Other  services  which  the  Bank offers include safe deposit boxes,
bank  money  orders,  wire  transfer facilities, and various cash management and
electronic banking programs.  Through Summit Investment Services, Inc., the Bank
provides  a full range of nondeposit investment products including annuities and
mutual  funds,  full  and  discount brokerage services, and financial management
services.

     The  Bank  also  offers a full range of short to intermediate-term, secured
and  unsecured  commercial  and  personal  loans for business, agriculture, real
estate,  home  improvement  and  automobiles,  credit  cards, letters of credit,
personal  investments  and home equity lines of credit.  It is the Bank's intent
to  originate  quality,  profitable loans which will benefit the area's economy,
provide  a  reasonable return to our shareholders, and promote the growth of the
Bank.  Management  strives  to  maintain  quality  in  the loan portfolio and to
accept only those credit risks which meet the Bank's underwriting standards.  No
significant  portion  of  the  Company's loan portfolio is concentrated within a
single  industry  or  group  of  related  industries.

     The  Finance  Company  makes  and services installment loans to individuals
with  loan  principal amounts generally not exceeding $1,500 and with maturities
ranging  from  three  to  eighteen  months.  The  Finance  Company,  which  is
headquartered  in  Greenville,  South  Carolina, currently has 11 branch offices
throughout  South  Carolina.  The Finance Company's loan customers are primarily
in  the  low-to-moderate  income  brackets  and  are  engaged  in widely diverse
occupations.  A  loan  investigation  and credit history review is made for each
borrower,  either  through  credit  reporting  agencies  or  directly by Company
employees.  Freedom  also makes available to borrowers credit life, accident and
health,  and  property  insurance directly related to the extension of credit to
the  individual.  The business of the Finance Company is rather seasonal and the
amount  of loans outstanding increases significantly at the end of each calendar
year  due  to  the seasonal loan demand, while the first quarter of the calendar
year  often  results  in  substantial  loan  paydowns.

     With  the  exception  of  the  loans  acquired  to  expand Freedom's branch
network, the Company has pursued a strategy of growth through internal expansion
since  its  inception.  At  December  31,  1998, the Company had total assets of
$170.5 million, total deposits of $140.2 million, loans, net of unearned income,
of $130.7 million and shareholders' equity of $15.7 million.  This compares with
total  assets  of  $160.3  million,  total  deposits of $140.9 million, loans of
$118.8  million  and shareholders' equity of $13.4 million at December 31, 1997.

     As  a  bank  holding  company,  the  Company is a legal entity separate and
distinct from its subsidiaries.  The Company coordinates the financial resources
of  the  consolidated  enterprise  and  maintains  financial,  operational  and
administrative  systems  that  allow  centralized  evaluation  of  subsidiary
operations  and coordination of selected policies and activities.  The Company's
operating revenues and net income are derived from its subsidiaries through fees
for  services  performed  and  interest  on  advances  and  loans.

TERRITORY  SERVED  AND  COMPETITION
     THE  BANK:  Summit  National  Bank  and  its  subsidiary, Summit Investment
Services,  Inc., are located in Greenville, South Carolina.  The extended market
area  encompasses  Greenville  County,  with the principal market area being the
urban  areas of Greenville County.  Greenville, South Carolina is located in the
fast  growing  Interstate-85  corridor  between  Charlotte,  North  Carolina and
Atlanta,  Georgia.  The  economy of Greenville is primarily industrial in nature
and the area is considered one of the Southeast's leading manufacturing centers.

     Greenville,  South  Carolina  is  a  highly  competitive commercial banking
market  in  which  all  of  the largest banks in the state are represented.  The
competition  among  the  various  financial  institutions is based upon interest
rates  offered  on deposit accounts, interest rates charged on loans, credit and
service  charges,  the  quality of services rendered, the convenience of banking
facilities,  and,  in  the case of loans to large commercial borrowers, relative
lending  limits.

     Many  of the competitor banks in the Bank's market area are subsidiaries of
bank  holding  companies  which  own banks in other southeastern states.  In the
conduct of certain areas of business, the Bank may also compete with savings and
loan associations, credit unions, insurance companies, securities firms, leasing
companies and other financial institutions, some of which are not subject to the
same  degree  of  regulation  and  restrictions  as the Bank.  The Bank may also
compete  with  out-of-state financial institutions which operate loan production
offices,  originate  mortgages,  accept money market deposits, and provide other
financial  services.  The  Bank's  investment  subsidiary  competes  with larger
brokerage houses and financial planners, discount brokers and internet brokerage
service  providers.

     Many  of these competitors have substantially greater resources and lending
abilities  due  to  their  size  than  the Bank or its subsidiary have and these
competitors  may  offer  services,  such  as  international  banking  and  trust
services,  that  the  Bank  is  not  currently providing.  Moreover, most of the
competitors have multiple branch networks located throughout the extended market
area,  while  the  Bank  currently  has  only  three locations, which could be a
competitive  disadvantage.  As  a result, the Bank does not generally attempt to
compete  for  the banking relationships of larger corporations, but concentrates
its  efforts  on small and medium-sized businesses and individuals.  The Company
believes  that the Bank is able to compete effectively in this market segment by
offering  competitive  pricing  of services and quality, experience and personal
treatment  in  the  execution  of  services.

     The  Bank  and its subsidiary are not dependent upon a single or a very few
customers,  the  loss  of  which  would  have  a  material  adverse  effect.

     THE  FINANCE  COMPANY:  Freedom  Finance,  Inc.  serves  its customers from
locations  in  Bishopville,  Columbia,  Conway, Florence, Greenville, Kingstree,
Lake  City,  Manning,  Moncks  Corner,  St.  George, and Sumter, South Carolina.
Competition  between  consumer  finance companies is not generally as intense as
that  among banks, however, this segment of the market has become over-served in
areas  of  South  Carolina.  The  amounts,  rates,  and fees charged on consumer
finance  loans  are  restricted  by  state  law according to the type of license
granted  by  the South Carolina State Board of Financial Institutions.  Numerous
other  finance  companies  which offer similar types of loans are located in the
areas  served  by  Freedom.

     The  Finance  Company  competes  directly with national, regional and local
consumer  finance  companies. The principal areas of competition in the consumer
finance  industry  are  convenience  of  services to customers, effectiveness of
advertising,  effectiveness  of administration of loans and the cost of borrowed
money.  Many  of  the  finance  companies  competing  with  Freedom  may  have
substantially  greater  resources and lending abilities than the Finance Company
and  may  have  more branches within the specific market areas in which they and
the  Finance  Company compete.  The Company believes that the Finance Company is
able  to  compete  effectively  in  its  current  markets.

EMPLOYEES
     As  of  December  31, 1998, the Company employed a total of three executive
officers.  Additionally,  the Company and its subsidiaries employed 73 full-time
equivalent  employees.  Management considers its relations with its employees to
be  good.

MONETARY  POLICY
     The  earnings  of  the  Company  and  it's  bank subsidiary may be affected
significantly  by  the  monetary  policies  of  the  Federal Reserve Board which
regulates  the  money  supply in order to mitigate recessionary and inflationary
pressures.  Among  the  techniques  used  to implement these objectives are open
market  operations  in United States Government securities, changes in the rates
paid  by  banks  on bank borrowings, changes in the reserve requirements against
bank  deposits and limitations on interest rates which banks may pay on time and
savings  deposits.  These  techniques  are  used  in  varying  combinations  to
influence  overall  growth  and  distribution  of  bank  loans,  investments and
deposits,  and their use may also affect interest rates charged on loans or paid
on  deposits.

IMPACT  OF  INFLATION
     Unlike  most  industrial companies, the assets and liabilities of financial
institutions such as the Company's subsidiary, are primarily monetary in nature.
Therefore,  the  Company's  performance is not generally affected by the general
levels  of  inflation  on  the price of goods and services.  While the Company's
noninterest  income  and  expense  and  the  interest  rates earned and paid are
affected  by  the  rate  of  inflation, the Company believes that the effects of
inflation  are  generally  manageable  through  asset/liability  management.

ACCOUNTING  ISSUES
     In  June  1998,  the  Financial  Accounting Standards Board ("FASB") issued
Statement  of  Financial  Accounting  Standards  ("SFAS")  133,  "Accounting for
Derivative  Instruments  and Hedging Activities."  SFAS 133 changes the previous
accounting definition of a derivative and discusses the appropriateness of hedge
accounting  for  various  forms of hedging activities.  Under this standard, all
derivatives  are  measured  at  fair  value  and  recognized in the statement of
financial position as assets or liabilities.  This standard is effective for all
fiscal  quarters  and  years beginning after June 15, 1999.  Because the Company
has  no  derivative  activity at this time, management does not expect that this
standard  will  have  a  significant  effect  on  the  Company.

SUPERVISION  AND  REGULATION
     GENERAL:  The  Company and its subsidiaries are extensively regulated under
federal  and  state  law.  These  laws and regulations are primarily intended to
protect consumer borrowers and depositors, not shareholders.  To the extent that
the  following  information  describes statutory or regulatory provisions, it is
qualified  in  its  entirety  by  reference  to  the  particular  statutes  and
regulations.  Any  change  in  the applicable laws may have a material effect on
the  business and prospects of the Company.  The operation of the Company may be
affected  by  legislative and regulatory changes and by the monetary policies of
various  regulatory  authorities.  The  Federal Reserve examines the Company and
may  examine  the  Bank  and  Finance  Company.

     THE  COMPANY:  The  Company is a bank holding company within the meaning of
the  Bank  Holding Company Act of 1956, as amended (the "BHCA"), and as such, is
under  the supervisory and regulatory authority of the Board of Governors of the
Federal  Reserve  System  (the  "Federal  Reserve").  As  a bank holding company
registered  under  the  laws of the South Carolina Bank Holding Company Act, the
Company  is  also  subject  to  regulation  by  the  State  Board  of  Financial
Institutions.  Thus,  the  Company  is required to file annual reports and other
information  with  the  Federal  Reserve  and  the South Carolina State Board of
Financial Institutions regarding its financial condition, results of operations,
management  and  intercompany relationships and transactions between the Company
and  its  subsidiaries.

     Under  the BHCA, the Company's activities and those of its subsidiaries are
limited  to  banking,  managing  or controlling banks, furnishing services to or
performing  services for its subsidiaries or engaging in any other activity that
the  Federal  Reserve determines to be so closely related to banking or managing
or  controlling  banks  as  to  be  a  proper  incident thereto.  In making such
determinations,  the  Federal  Reserve  is  required  to  consider  whether  the
performance of such activities by a bank holding company or its subsidiaries can
reasonably  be  expected  to  produce  benefits  to  the public, such as greater
convenience  and  increased  competition  or  gains in efficiency, that outweigh
possible adverse effects, such as undue concentration of resources, decreased or
unfair  competition,  conflicts  of  interest or unsound banking practices.  The
BHCA  requires  prior  Federal  Reserve  approval  for,  among other things, the
acquisition by a bank holding company of direct or indirect ownership or control
of  more  than 5% of the voting shares or substantially all of the assets of any
bank,  or  for  a merger or consolidation of a bank holding company with another
bank  holding  company.

     Additionally,  the  BHCA  prohibits  the  Company  from engaging in or from
acquiring  ownership  or control of more than 5% of the outstanding voting stock
of any company engaged in nonbanking business unless such business is determined
by  the  Federal  Reserve  to  be  so  closely related to banking or managing or
controlling  banks  as to be properly incident thereto.  The BHCA generally does
not  place territorial restrictions on the activities of such nonbanking-related
entities.

     Under  the  policy  of  the  Federal  Reserve  with respect to bank holding
company  operations,  a bank holding company is required to serve as a source of
financial  strength  to  its  subsidiary  depository  institutions and to commit
resources to support such institutions in circumstances where it might not do so
absent  such  policy.  The Federal Deposit Insurance Corporation Improvement Act
of  1991  ("FDICIA"),  requires  that  a bank holding company guarantee that any
"undercapitalized"  (as  defined  in the statute) insured depository institution
subsidiary  will  comply with the terms of any capital restoration plan filed by
such  subsidiary with its appropriate federal banking agency up to the lesser of
(i)  an  amount  equal  to  5% of the institution's total assets at the time the
institution  became  undercapitalized,  or (ii) the amount that is necessary (or
would be necessary) to bring the institution into compliance with all applicable
capital  standards  as  of  the  time  the institution fails to comply with such
capital  restoration  plan.

     Under  Section  5(e)  of the BHCA, the Federal Reserve has the authority to
terminate any activity of a bank holding company that constitutes a serious risk
to the financial soundness or stability of any subsidiary depository institution
or  to terminate its control of such subsidiary.  Further, FDICIA grants federal
bank  regulatory  authorities  additional  discretion  to require a bank holding
company  to  devest  itself  of  any  bank  or  nonbank subsidiary if the agency
determines  that  divesture  may  aid  the  depository  institution's  financial
condition.

     In  July  1996,  South  Carolina  enacted  the  South  Carolina Banking and
Branching  Efficiency  Act  (the "Act") which provides that, except as otherwise
expressly permitted by federal law and in limited circumstances specified in the
Act, a company may not acquire a South Carolina bank holding company (as defined
in  the  Act)  or  a  bank chartered under the laws of South Carolina unless the
company  obtains  prior  approval  for the State Board of Financial Institutions
(the  "State  Board").  The  company proposing to make the acquisition must file
with  the  State  Board  a notice or application that the company filed with the
responsible  federal bank supervisory agency and pay the fee, if any, prescribed
by  the  State Board.  In addition, the company must publish prior notice of the
application  once  in a daily newspaper of general circulation in South Carolina
and provide an opportunity for public comment.  If the company proposing to make
the  acquisition  is an out-of-state bank holding company, it must qualify to do
business  in  South Carolina or appoint an agent for service of process in South
Carolina.  The  Act  also  provides  that  approval  of  the State Board must be
obtained before an interstate bank merger involving a South Carolina bank may be
consummated.

     The  passage of the Riegle-Neal Interstate Banking and Branching Efficiency
Act  of  1994  (the "Riegle-Neal Act") has increased the ability of bank holding
companies  and  banks to operate across state lines.  Under the Riegle-Neal Act,
with  the  approval of the Board of Governors of the Federal Reserve System, and
subject  to  nationwide  and statewide concentration limits, the Company and any
other  bank holding company located in South Carolina may acquire a bank located
in  any other state and a bank holding company located outside of South Carolina
may  acquire  any South Carolina-based bank, provided the acquirer is adequately
capitalized  and  adequately  managed,  as  defined  in  the  Riegle-Neal  Act.

     The Company is an "affiliate" of the Bank within the meaning of the Federal
Reserve  Act, which imposes restrictions on loans by the Bank to the Company, on
investments  by  the  Bank in the stock or securities of the Company, and on the
use  of  such  stock  or  securities  as collateral for loans by the Bank to any
borrower.  The  Company  and  the Bank are subject to Section 23A of the Federal
Reserve  Act.  Section  23A  defines  "covered  transactions",  which  includes
extensions  of  credit,  and  limits  a  bank's  covered  transactions  with any
affiliate  to  10% of such bank's capital and surplus.  All covered transactions
with  all  affiliates cannot in the aggregate exceed 20% of a bank's capital and
surplus.  All  covered and exempt transactions between a bank and its affiliates
must  be  on  terms  and  conditions  consistent  with  safe  and  sound banking
practices,  and  banks  and  their  subsidiaries  are prohibited from purchasing
low-quality  assets  from  the bank's affiliates.  Finally, Section 23A requires
that  all  of  a  bank's  extensions  of credit to an affiliate be appropriately
secured  by  acceptable  and  adequate collateral, as defined in the regulation.
The  Company and the Bank are also subject to Section 23B of the Federal Reserve
Act,  which  generally limits covered and other transactions among affiliates to
terms  and circumstances, including credit standards, that are substantially the
same  or at least as favorable to a bank holding company, a bank or a subsidiary
of  either  as  prevailing  at  the  time  for  transactions  with  unaffiliated
companies.

     THE  BANK:  The  Company's  subsidiary  bank,  Summit  National  Bank, is a
nationally  chartered  financial institution, and as such, is subject to various
statutory  requirements,  supervision  and  regulation,  of  which  regular bank
examinations are a part, promulgated and enforced primarily by the Office of the
Comptroller  of  the  Currency  (the  "Comptroller").  These statutes, rules and
regulations  relate  to  insurance  of  deposits,  required  reserves, allowable
investments,  loans, mergers, consolidations, issuance of securities, payment of
dividends,  establishment  of  branches,  and  other  aspects of the business of
Summit  National  Bank.

     The  Comptroller  is responsible for overseeing the affairs of all national
banks  and  periodically  examines  national banks to determine their compliance
with  law  and  regulations.  The  Comptroller  monitors all areas of the Bank's
operations,  including  loans,  mortgages,  issuance  of  securities,  capital
adequacy,  risk management, payment of dividends, and establishment of branches.
In  addition,  the  Comptroller  has  authority to issue cease and desist orders
against  national  banks  which are engaged in unsafe or unsound practice in the
conduct  of  their  business.  Federal banking laws applicable to all depository
financial  institutions,  among other things, (i) afford federal bank regulatory
agencies  with  powers  to  prevent  unsafe  and unsound banking practices; (ii)
restrict preferential loans by banks to "insiders" of banks; (iii) require banks
to  keep  information on loans to major shareholders and executive officers, and
(iv) bar certain director and officer interlocks between financial institutions.

     The  Comptroller  also administers a number of federal statutes which apply
to  national banks such as the Depository Institution Management Interlocks Act,
the International Lending Supervision Act of 1983 and the Community Reinvestment
Act  of  1977 ("CRA").  CRA requires that, in connection with their examinations
of financial institutions, the Comptroller shall evaluate the record of the Bank
in  meeting  the credit needs of the local community, including low and moderate
income  neighborhoods, consistent with the safe and sound operation of the Bank.
These  factors  are  also  considered  in  evaluating mergers, acquisitions, and
applications to open a branch facility.  The federal banking agencies, including
the  Comptroller, issued a new joint rule which became effective for the Bank in
1997  related  to  evaluating  an  institution's  CRA performance.  The new rule
evaluates  institutions  based on their actual performance (rather than efforts)
in  meeting  community  credit  needs.  Subject  to  certain  exceptions,  the
Comptroller  assesses  the  CRA  performance  of  a  bank  by  applying lending,
investment, and service tests.  The Comptroller assigns a rating to a bank based
on  the  bank's  performance  under  the tests.  To evaluate compliance with the
lending, investment and service tests, subject to certain exceptions, banks will
be  required  to collect and report to the Comptroller extensive demographic and
loan  data.  Summit  National  Bank  received  a satisfactory rating in its most
recent  CRA  examination.

     The Bank is also a member of the FDIC, which currently insures the deposits
of  each  member  bank  to  a  maximum  of  $100,000  per  depositor.  For  this
protection,  each  bank pays a semiannual statutory assessment and is subject to
the  rules  and  regulations  of  the  FDIC.  Further, the FDIC is authorized to
impose  one or more special assessments in any amount deemed necessary to enable
repayment  of  amounts borrowed by the FDIC from the United Stated Department of
the  Treasury.  The  FDIC  has  broad authority to prohibit Summit National Bank
from  engaging  in unsafe or unsound banking practices and may remove or suspend
officers  or  directors  of  a bank to protect its soundness.  The FDIC requires
insured banks to maintain specified levels of capital, maintain certain security
devices  and  procedures  and  to  file  quarterly reports and other information
regarding  its  operations.

     Effective  January  1,  1996,  the FDIC implemented a risk-based assessment
schedule,  having  assessments  ranging  from 0.00% to 0.27% of an institution's
average  deposit  base.  The  actual  assessment to be paid by each FDIC-insured
institution  is based on the institution's assessment risk classification, which
is determined based on whether the institution is considered "well capitalized",
"adequately  capitalized",  or "undercapitalized", as terms have been defined in
applicable federal regulations adopted to implement the prompt corrective action
provisions  of  the  Federal  Deposit  Insurance  Corporation  Improvement  Act
("FDICIA"), and whether such institution is considered by its supervisory agency
to be financially sound or to have supervisory concerns.  In addition, effective
January  1,  1997,  the  Deposit  Insurance  Funds Act of 1996 (the "Funds Act")
implemented  a separate Financing Corporation ("FICO") assessment to service the
interest  on  its  bond  obligation  from the Savings Association Insurance Fund
("SAIF")  assessment  resulting  from  the  Fund  Act.  The  amount  assessed on
individual  institutions  by the FICO will be in addition to the amount paid for
deposit  insurance  according  to  the FDIC's risk-related assessment schedules.
FICO  assessment  rates  are adjusted quarterly to reflect changes in assessment
bases  for  the  BIF and SAIF.  Based on the Bank's current financial condition,
the  current FDIC assessment rate for the Bank is at the lowest available level.

     FDICIA, which became effective December 19, 1991, contains broad powers for
federal  banking  regulators to take certain enforcement actions against problem
institutions  as  well  as imposing significant restrictions on undercapitalized
financial  institutions,  including  establishing  a  capital-based  supervisory
system  for  prompt  corrective  action  ("PCA").  Under  the  PCA  provisions,
regulatory  agencies can require submission and funding of a capital restoration
plan by an undercapitalized institution, place limits on its activities, require
the raising of additional capital, and can ultimately require the appointment of
a  conservator or receivor of the institution if deemed necessary and prudent by
the  regulatory  agency.

     FDICIA  also  makes  some  changes to the deposit insurance coverage rules;
limits  the  use of brokered deposits by certain banks; establishes a risk-based
deposit  insurance  premium system; provides pass-through protection for certain
types  of  pension  plans;  and mandates the promulgation of uniform regulations
that  establish  standards  for  real  estate  lending.  The enacted legislation
includes the Truth in Savings Act; imposes new accounting, audit and examination
requirements  for  banks with assets greater than $150 million; revises existing
and  imposes  new  provisions  with  regard  to  transactions with insiders; and
authorizes  certain  bank  and  thrift  cross-industry mergers and acquisitions.

     In  conjunction  with  the  FDICIA,  in September 1992, the Federal Reserve
Board  approved a final rule which establishes the capital levels that determine
a  bank's  PCA capital category.  Under the final capital level definitions, the
Bank is currently in the "well-capitalized" category.  In December 1992, a final
rule  was  issued  requiring  insured  depository  institutions  to  develop and
implement internal procedures to evaluate and control both credit and settlement
exposure  to  financial  institutions  with  which  they  do  business.

     During  1994,  the Comptroller issued new regulations including (1) a final
rule  increasing  the  threshold  level  for  the  requirement  of appraisals on
commercial  real  estate  loans  to  properties securing loans totaling at least
$250,000  and other amendments to appraisal requirements effective June 7, 1994;
(2) new examination procedures for "noncomplex" banks effective October 1, 1994;
and  (3)  guidelines  for  financial  derivatives,  specifically  addressing the
various  risks  associated  with  such.

     In  June  1995,  the FDIC approved a final rule to implement the portion of
Section  305 of FDICIA that requires regulators to revise the risk-based capital
standards  to  ensure that they take adequate account of interest rate risk.  An
exemption  from  the  reporting  requirement is offered to banks meeting certain
size  and  risk  profile  criteria.

     In  December  1996,  the Federal Financial Institutions Examination Council
adopted  a  revised Uniform Financial Institutions Rating System ("CAMELS rating
system").  This  revised  CAMELS  rating  system  is  used  by Federal and state
regulators  to assess the soundness of financial institutions on a uniform basis
and to identify those institutions requiring special supervisory attention.  The
basic  structure  of  the  original  CAMEL  rating  system was retained with the
addition  of  a  sixth component related to a bank's sensitivity to market risk.
The  six  components  of  the  CAMELS rating system are: 1) capital adequacy, 2)
asset  quality,  3) management, 4) earnings, 5) liquidity, and 6) sensitivity to
market  risk.  The  new component involves measuring the degree to which changes
in interest rates, foreign exchange rates, commodity prices or equity prices can
adversely  affect a financial institution's earnings or capital and management's
ability  to  control  this  risk.  The evaluation of these six components is the
basis  for  a  composite  rating  assigned  to  each financial institution.  The
revised  CAMELS  rating  system was used on all examinations started on or after
January  1,  1997.

     Interest  and certain other charges collected or contracted for by the Bank
is  subject  to  state  usury  laws and certain federal laws concerning interest
rates.  The  Bank's  operations  are  also  subject  to  certain  federal  laws
applicable  to  credit  transactions,  such  as the federal Truth-In-Lending Act
governing  disclosures  of  credit  terms  to  consumer borrowers; CRA requiring
financial institutions to meet their obligations to provide for the total credit
needs  of  the  community;  the  Home  Mortgage Disclosure Act of 1975 requiring
financial  institutions to provide information to enable the public to determine
whether  it  is  fulfilling  its  obligation  to  meet  the housing needs of the
community it serves; the Equal Credit Opportunity Act prohibiting discrimination
on  the  basis  of race, creed, or other prohibited factors in extending credit;
the  Fair  Credit  Reporting  Act  of  1978  governing the use and provisions of
information to credit reporting agencies; the Fair Debt Collection Act governing
the  manner  in  which  consumer  debts  may  be  collected;  and  the rules and
regulations  of  the various federal agencies charged with the responsibility of
implementing  such  federal  laws.

     The  deposit  operations  of  the  Bank  are  also  subject to the Right to
Financial  Privacy  Act  which  imposes  a  duty  to maintain confidentiality of
consumer  financial  records  and  prescribes  procedures  for  complying  with
administrative subpoenas of financial records, and the Electronic Funds Transfer
Act  and  Regulation E issued by the Federal Reserve to implement that act which
governs  automatic  deposits  to  and  withdrawals  from  deposit  accounts  and
customers'  rights  and  liabilities  arising  from  the use of automated teller
machines  and  other  electronic  banking  services.

     THE  FINANCE  COMPANY:  The  Company's  subsidiary finance company, Freedom
Finance,  Inc.,  is  a consumer finance company licensed  and  regulated  by the
State  Board  of  Financial  Institutions  for South Carolina.  Accordingly, the
Finance Company is subject to annual examinations by the State Board and various
regulatory requirements, including annual reporting, annual license renewal, and
other  regulations  pertaining  to the extension of credit.  Specifically, state
laws  and  regulations  apply to maximum loan amounts, terms, interest rates and
credit  insurance and other fee charges.  These laws and regulations are subject
to  both  repeal  and revision from time to time, often in response to pressures
exerted  by  consumer  rights  groups.

CAPITAL  REQUIREMENTS
     Pursuant to the general supervisory authority conferred by the BHCA and the
directives  set  forth in the International Lending Supervision Act of 1983, the
Federal  Reserve  and  Comptroller  have  adopted  risk-based  capital  adequacy
guidelines for banks and bank holding companies subject to their regulation as a
means  for  determining  the  adequacy of capital based on the risks inherent in
carrying various classes of assets and off-balance sheet items.  Failure to meet
minimum  capital  requirements  can  initiate  certain  mandatory  and  possibly
additional discretionary actions by regulators that, if undertaken, could have a
material  effect on the financial statements.  Under capital adequacy guidelines
and  the  regulatory framework for prompt corrective action, the Company and the
Bank must meet specific capital guidelines that involve quantitative measures of
the  Company's  and the Bank's assets, liabilities and certain off-balance sheet
items  as  calculated  under regulatory accounting practices.  The Company's and
the  Bank's  capital  amounts and classification are also subject to qualitative
judgments  by  the  regulators  about  components,  risk  weightings,  and other
factors.

     Quantitative  measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios of total
and  Tier  I  capital (as defined in the regulation) to risk-weighted assets (as
defined)  and  to  total  assets.  Management believes, as of December 31, 1998,
that  the  Company  and the Bank meet all capital adequacy requirements to which
they  are  subject.  At  December  31, 1998 and 1997, the Bank is categorized as
"well  capitalized" under the regulatory framework for prompt corrective action.
To  be  categorized  as "well capitalized", the Bank must maintain minimum total
risk-based,  Tier I risk-based and Tier I leverage ratios.  There are no current
conditions  or events that management believes would change the Company's or the
Bank's  category.

     The  Company's and the Bank's actual capital amounts and ratios at December
31,  1998 and 1997 as well as the minimum calculated amounts for each regulatory
defined  category  are included in this report under Part II, Item 8. "Financial
Statements  and  Supplemental  Data"  as  Note  14  to the Notes to Consolidated
Financial  Statements.

DIVIDENDS
     The  holders  of  the  Company's  common stock are entitled to receive cash
dividends  when  and  if  declared  by  the  Board of Directors out of the funds
legally available therefor.  The Company is a legal entity separate and distinct
from  its  subsidiaries  and  depends  in large part for its income available to
distribute  to  shareholders  on  the  payment  of  cash  dividends  from  its
subsidiaries.  While  the  Company  is  not  presently subject to any regulatory
restrictions  on dividends, the Bank is subject to such regulatory cash dividend
restrictions.

     Specifically,  approval of the Comptroller of the Currency will be required
for  any cash dividend to be paid to the Company by the Bank if the total of all
cash  dividends,  including  any proposed cash dividend, declared by the Bank in
any  calendar  year  exceeds the total of its net profits for that year combined
with  its  retained  net  profits for the preceding two years, less any required
transfers  to  surplus.  Additionally,  the  National  Bank  Act provides that a
national  bank  cannot pay cash dividends or other distributions to shareholders
out  of  any  portion of its common stock or preferred stock accounts and that a
bank  shall  pay no cash dividend in an amount greater than its net profits then
on  hand, after deduction of its losses and bad debts.  As of December 31, 1998,
no cash dividends have been declared or paid by the Bank.  At December 31, 1998,
the  Bank  had  available  retained  earnings  of  $5.2  million.

     On  August  24,  1998,  the  Company  issued  a  two-for-one stock split to
shareholders  of  record  on  August  10,  1998.  A total of 1,444,299 shares of
common  stock  were  issued in connection with the two-for-one stock split.  The
stated  par  value  of  each  share was not changed from $1.00.  On November 16,
1998,  the  Board  of  Directors  approved  the  Company's  seventh  5%  stock
distribution  which was issued on December 28, 1998 to shareholders of record as
of  December  14,  1998.  This  distribution resulted in the issuance of 144,550
shares  of  the  Company's  $1.00  par  value  common  stock.

SELECTED  STATISTICAL  FINANCIAL  INFORMATION
     The  Company,  through  the  operations of the Bank, offers a wide range of
financial  related  services to individual and corporate customers.  The Bank is
subject  to  competition  from  other  financial institutions.  The Bank is also
subject  to  the  regulations of certain federal agencies and undergoes periodic
examinations  by  those  regulatory  authorities.  The  Company  has  no foreign
operations.

     The  consolidated  financial  statements  of  the  Company  are prepared in
conformity  with  generally  accepted  accounting  principles.  In preparing the
consolidated  financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities as of the
date  of  the  balance  sheet  and  revenues  and  expenses  for the period. The
consolidated selected statistical financial data provided on the following pages
presents  a  more  detailed  review  of  the  Company's  business  activities.


<PAGE>

NET  INTEREST  INCOME  ANALYSIS
-------------------------------
     Net  interest  income, the difference between the interest earned on assets
and  the  interest  paid  for  liabilities  used to support those assets, is the
principal  source  of  the  Company's operating income.  Net interest income was
$7.6  million,  $7.0  million,  and  $5.6  million  for  1998,  1997,  and 1996,
respectively.  The  Company's  average  interest  rate  spread,  the  difference
between  the  average  interest  rate  earned on interest-earning assets and the
average  interest  paid  on interest-bearing liabilities, increased between 1996
and  1997  because of the Company's balance sheet structure and the increases in
rates  on  interest-earning  assets.  The spread remained relatively constant in
1998  as  the  reduction  in  rates  on  interest-earning assets was offset by a
decline  in the rates paid on interest-bearing liabilities.  The increase in net
interest  income in 1998 is directly related to the increase in the average loan
and deposit volume of the Bank of 9% and 10%, respectively.  Net interest income
increased  in 1997 also related to the higher average loan and deposit volume of
the  Bank  which  was  up  from  1996  by  25%  and  24%,  respectively.

     For the year ended December 31, 1998, the Company's net interest margin was
4.95%, compared to 4.94% in 1997 and 4.81% for 1996.  The net interest margin is
calculated as net interest income divided by average earning assets.  The margin
for  1998  remained relatively constant with the prior year due primarily to the
reduction  in  the  cost  of  funds  which offset the declining rate environment
experienced  as  the prime rate decreased 75 basis points to 7.75% in the fourth
quarter  of 1998.  The increase in the net interest margin between 1996 and 1997
is  related  to  the  general  rising rate environment during that period as the
prime  rate  increased  from  8.25%  to  8.50%  in  March  1997.

     The  Company  believes it has emphasized proper management of interest rate
spreads  to  offset  the  higher  cost  of deposits recently realized due to the
Bank's  loan  demand  and  competition  in  the  Bank's  primary marketplace for
deposits.  The  Company manages interest rate spreads by monitoring the maturity
of  assets  and  related  liabilities, interest rates, risk exposure, liquidity,
funding  sources, and capital resources.  The objective of such monitoring is to
maximize  net interest income over an extended period of time, while maintaining
associated  risk  within  prescribed  policy  limits.

     The  following  table  presents the average balances, the average yield and
the  interest income earned on interest-earning assets, and the average rate and
the  interest paid or accrued on interest-bearing liabilities of the Company for
the  last  three  years.  Also  presented  is  the  average yields and rates for
interest-earning  assets  and interest-bearing liabilities at December 31, 1998.
Tabular presentation of all average statistical data is based on daily averages.

<PAGE>

<TABLE>
<CAPTION>


                                    AVERAGE BALANCES AND NET INTEREST INCOME ANALYSIS
                                                  (DOLLARS IN THOUSANDS)

                                           Average      1998      1998     1998      1997      1997     1997      1996 
                                          Yield/Rate   Average   Income/   Yield/   Average   Income/   Yield/   Average
                                           12/31/98    Balance   Expense    Rate    Balance   Expense    Rate    Balance
                                          -----------  --------  --------  -------  --------  --------  -------  --------
<S>                                       <C>          <C>       <C>       <C>      <C>       <C>       <C>      <C>
ASSETS
Earning Assets:
Loans (net of unearned income)                 10.11%  $120,455  $ 12,275   10.19%  $110,812  $ 11,491   10.37%  $ 88,481
Investment securities (taxable)                 5.86%    19,168     1,155    6.02%    18,597     1,173    6.31%    20,641
Investment securities
(non-taxable) (1)                               7.43%     8,365       413    7.49%     2,705       135    7.56%       589
Investment in stock (2)                         6.48%       771        50    6.48%       685        45    6.57%       600
Federal funds sold                              4.82%     7,242       397    5.48%     7,542       410    5.44%     3,834
Interest-bearing bank balances                  4.87%     2,047       126    6.15%     2,220       127    5.72%     1,892
                                          -----------  --------  --------  -------  --------  --------  -------  --------
     Total earning assets                       9.02%   158,048  $ 14,416    9.26%   142,561  $ 13,381    9.43%   116,037
                                          ===========            ========  =======            ========  =======          
Non-earning assets                                        8,384                        7,101                        5,960
                                                       --------                     --------                     --------
     Total average assets                              $166,432                     $149,662                     $121,997
                                                       ========                     ========                     ========
LIABILITIES & SHAREHOLDERS'
EQUITY
Liabilities:
Interest-bearing deposits:
  Interest checking                             2.02%  $  6,931  $    155    2.24%  $  6,793  $    171    2.52%  $  5,383
  Savings                                       2.43%     1,643        42    2.56%     1,532        43    2.81%     1,635
  Money market accounts                         4.33%    44,214     2,058    4.65%    31,873     1,451    4.55%    23,843
  Time deposits > $100M                         5.48%    25,316     1,445    5.71%    27,872     1,616    5.80%    22,566
  Other time deposits                           5.44%    47,793     2,731    5.72%    48,958     2,859    5.84%    40,673
                                          -----------  --------  --------  -------  --------  --------  -------  --------
     Total interest-bearing deposits            4.73%   125,902     6,431    5.11%   117,028     6,140    5.25%    94,100
Federal funds purchased
 and repurchase agreements                      5.57%       836        43    5.14%       789        42    5.32%     1,398
Other short-term borrowings                     6.45%     1,053        71    6.74%       776        52    6.70%       317
FHLB advances                                   5.63%     4,517       257    5.67%     2,607       170    6.52%     1,724
                                          -----------  --------  --------  -------  --------  --------  -------  --------
     Total interest-bearing liabilities         4.76%   132,308  $  6,802    5.14%   121,200  $  6,404    5.28%    97,539
                                          ===========            ========  =======            ========  =======          
Noninterest bearing liabilities:
  Noninterest bearing deposits                           17,497                       14,222                       12,263
  Other noninterest bearing
liabilities                                               2,203                        1,740                        1,148
                                                       --------                     --------                     --------
     Total liabilities                                  152,008                      137,162                      110,950
Shareholders' equity                                     14,424                       12,500                       11,047
                                                       --------                     --------                     --------
     Total average liabilities and
      equity                                           $166,432                     $149,662                     $121,997
                                                       ========                     ========                     ========
Net interest margin (3)                                          $  7,614    4.95%            $  6,977    4.94%          
                                                                 ========  =======            ========  =======          
Interest rate spread (4)                                                     4.16%                        4.15%          
                                                                           =======                      =======          



                                            1996     1996
                                          Income/   Yield/
                                          Expense    Rate
                                          --------  -------
<S>                                       <C>       <C>
ASSETS
Earning Assets:
Loans (net of unearned income)            $  8,924   10.09%
Investment securities (taxable)              1,241    6.01%
Investment securities
(non-taxable) (1)                               29    7.08%
Investment in stock (2)                         39    6.47%
Federal funds sold                             207    5.41%
Interest-bearing bank balances                 107    5.64%
                                          --------  -------
     Total earning assets                 $ 10,547    9.09%
                                          ========  =======
Non-earning assets

     Total average assets

LIABILITIES & SHAREHOLDERS'
EQUITY
Liabilities:
Interest-bearing deposits:
  Interest checking                       $    118    2.19%
  Savings                                       47    2.86%
  Money market accounts                        987    4.14%
  Time deposits > $100M                      1,279    5.67%
  Other time deposits                        2,322    5.71%
                                          --------  -------
     Total interest-bearing deposits         4,753    5.05%
Federal funds purchased
 and repurchase agreements                      73    5.20%
Other short-term borrowings                     25    7.89%
FHLB advances                                  113    6.55%
                                          --------  -------
     Total interest-bearing liabilities   $  4,963    5.09%
                                          ========  =======
Noninterest bearing liabilities:
  Noninterest bearing deposits
  Other noninterest bearing
liabilities

     Total liabilities
Shareholders' equity

     Total average liabilities and
      equity

Net interest margin (3)                   $  5,583    4.81%
                                          ========  =======
Interest rate spread (4)                              3.96%
                                                    =======

<FN>


(1)  -     Yields on nontaxable investment securities have been adjusted to a tax equivalent basis assuming a 34% Federal
tax  rate.
(2)  -     Includes  investments  in  stock  of  Federal  Reserve  Bank,  Federal  Home  Loan  Bank,  and other equities.
(3)  -     Net interest margin is computed by dividing net interest income (adjusted to a tax equivalent basis assuming a
34%  Federal  tax  rate)  by  total  average  interest-earning  assets.
(4)  -     Interest  rate  spread  is the difference between the average yield on interest-earning assets and the average
rate  on  interest-bearing  liabilities.

</TABLE>


<PAGE>

ANALYSIS  OF  CHANGES  IN  INTEREST  DIFFERENTIAL
-------------------------------------------------
     Net  interest income ("NII") is affected by changes in the average interest
rate  earned  on  interest-earning  assets and the average interest rate paid on
interest-bearing  liabilities.  In  addition, net interest income is affected by
changes  in  the  volume  of  interest-earning  assets  and  interest-bearing
liabilities.  The  following  table  sets forth the dollar amount of increase in
interest  income  and  interest  expense resulting from changes in the volume of
interest-earning  assets  and  interest-bearing  liabilities and from changes in
yields  and rates.  For the purposes of this table, changes which are not solely
attributable  to  volume  or  rate  have  been  attributed  to  rate.

<TABLE>
<CAPTION>


                              VOLUME AND RATE VARIANCE ANALYSIS
                                    (DOLLARS IN THOUSANDS)

                                               1997 - 1998                    1996 - 1997
                                         ------------------------    -----------------------
                                            Related to     Total       Related to      Total
                                         ----------------  Change   ----------------   Change
                                          Volume    Rate   in NII    Volume    Rate    in NII
                                         --------  ------  ------   --------  ------  -------
<S>                                      <C>       <C>     <C>      <C>       <C>     <C>
Earning assets:
Loans (net of unearned income)           $ 1,000   ($216)  $  784   $ 2,242   $ 325   $2,567 
Investment securities (taxable)               36     (54)     (18)     (122)     54      (68)
Investment securities (non-taxable)          428    (150)     278       149     (43)     106 
Investment in stock                            6      (1)       5         5       1        6 
Federal funds sold                           (16)      3      (13)      200       3      203 
Interest-bearing bank balances               (10)      9       (1)       18       2       20 
                                         --------  ------  -------  --------  ------  -------
Total interest income                      1,444    (409)   1,035     2,492     342    2,834 
                                         --------  ------  -------  --------  ------  -------
Interest-bearing liabilities:
Interest-bearing deposits:
Interest checking                              3     (19)     (16)       31      22       53 
Savings                                        3      (4)      (1)       (3)     (1)      (4)
Money market accounts                        562      45      607       332     132      464 
Time deposits > $100M                       (148)    (23)    (171)      300      37      337 
Other time deposits                          (68)    (60)    (128)      473      64      537 
                                         --------  ------  -------  --------  ------  -------
Total interest-bearing deposits              352     (61)     291     1,133     254    1,387 
Federal funds purchased and repurchase
 agreements                                    2      (1)       1       (32)      1      (31)
Other short-term borrowings                   18       1       19        33      (6)      27 
FHLB advances                                126     (39)      87        58      (1)      57 
                                         --------  ------  -------  --------  ------  -------
Total interest expense                       498    (100)     398     1,192     248    1,440 
                                         --------  ------  -------  --------  ------  -------
Net interest differential                $   946   ($309)  $  637   $ 1,300   $  94   $1,394 
                                         ========  ======  =======  ========  ======  =======

</TABLE>




INTEREST  RATE  SENSITIVITY  ANALYSIS
-------------------------------------
     An  important  aspect of achieving satisfactory levels of net income is the
management  of  the  composition  and  maturities  of  rate sensitive assets and
liabilities in order to optimize net interest income as interest rates earned on
assets  and  paid  on  liabilities  fluctuate  from  time to time.  The interest
sensitivity  gap  (the "gap") is the difference between total interest sensitive
assets  and  liabilities in a given time period.  The gap provides an indication
of  the  extent  to  which  the Company's net interest income may be affected by
interest  rate  movements.

     The  objective of interest sensitivity management is to maintain reasonably
stable growth in net interest income despite changes in market interest rates by
maintaining  the  proper  mix  of  interest  sensitive  assets  and liabilities.
Management  seeks  to  maintain a general equilibrium between interest sensitive
assets and liabilities in order to insulate net interest income from significant
adverse  changes  in  market  rates.

     At  December  31,  1998,  on  a  cumulative  basis   through  12    months,
rate-sensitive liabilities exceed rate-sensitive assets, resulting in a 12 month
period  liability  sensitive position at the end of 1998 of $23.3 million.  When
the effective change ratio (the historical relative movement of each asset's and
liability's  rates in relation to a 100 basis point change in the prime rate) is
applied  to  the  interest  gap  position,  the  Company is actually in an asset
sensitive  position over a 12 month period and the entire repricing lives of the
assets  and liabilities.  This is primarily due to the fact that 63% of the loan
portfolio  moves  immediately  on  a one-to-one ratio with a change in the prime
rate, while the deposit accounts do not increase or decrease as much relative to
a  prime  rate  movement.

     An  asset sensitive position means that the Company's assets reprice faster
than  the  liabilities, resulting in increases in the net interest income during
periods  of  rising rates and decreases in net interest income when market rates
decline.  In  1997,  the  market experienced an increase in the prime rate which
was  apparent  in the higher net interest margin the Company reported in 1997 as
compared  to  the  prior  year.  In  the  fourth quarter of 1998, interest rates
dropped, leading to declines in the average yield on assets for 1998 as compared
to  1997.  However,  the  Company  was  able to maintain the net interest margin
relatively  constant  with  the  1997 margin due to the reduction in the overall
cost  of  funds  based  primarily  on (1) the higher percentage of floating rate
deposits in 1998 as compared to 1997 which allowed the Company to respond to the
prime  rate  drops;  and  (2)  the  maturities  of higher priced certificates of
deposit  throughout  1998  which  were  replaced with CDs at lower current rates
during  the  year.

     The  following  table  presents  a measure, in a number of time frames, the
interest  sensitivity  gap  by  subtracting  interest-sensitive liabilities from
interest-sensitive  assets.

<TABLE>
<CAPTION>


                                           INTEREST SENSITIVITY ANALYSIS
                                              (DOLLARS IN THOUSANDS)

                                                             As of December 31, 1998
                                                     Assets and Liabilities Repricing Within
                                       -----------------------------------------------------------------
                                       3 Months or Less    4 to 12 Months   1 to 5 Years   Over 5 Years    Total
                                      ------------------  ----------------  -------------  -------------  --------
<S>                                   <C>                 <C>               <C>            <C>            <C>
Interest-earning assets:
Loans (net of unearned income)        $          86,088   $         3,624   $      38,332  $       2,625  $130,669
Investments  (1)                                  3,448             2,859           6,336         15,251    27,894
Federal funds sold                                  400                 -               -              -       400
Interest-bearing bank balances                      623                 -               -              -       623
                                      ------------------  ----------------  -------------  -------------  --------
   Total                                         90,559             6,483          44,668         17,876   159,586
                                      ------------------  ----------------  -------------  -------------  --------
Interest-bearing liabilities:
Demand deposits  (2)                             58,588                 -               -              -    58,588
Time deposits > $100M                             9,836             7,000             965              -    17,801
Other time deposits                              18,906            18,651           4,785            635    42,977
Federal funds purchased, repurchase
 agreements, other borrowings and
 FHLB advances                                    7,386                 -           4,000          1,000    12,386
                                      ------------------  ----------------  -------------  -------------  --------
   Total                                         94,716            25,651           9,750          1,635   131,752
                                      ------------------  ----------------  -------------  -------------  --------
Period interest-sensitivity gap                 ($4,157)         ($19,168)  $      34,918  $      16,241  $ 27,834
                                      ==================  ================  =============  =============  ========
Cumulative interest-sensitivity gap             ($4,157)         ($23,325)  $      11,593  $      27,834
                                      ==================  ================  =============  =============          
<FN>


(1)  -  Presented  at  market value as all investment securities are classified as "available for sale".  Includes
the  Bank's  investment  in  stock  of  Federal  Reserve  Bank,  Federal  Home  Loan  Bank,  and  other  equities.
(2)  -  Includes  interest-bearing  checking  accounts,  money market accounts, and regular savings accounts.

</TABLE>



     At  December  31, 1998, approximately 61% of the Company's interest-earning
assets  reprice  or  mature within one year, as compared to approximately 91% of
the  interest-bearing  liabilities.

     Asset-liability management is the process by which the Company monitors and
controls  the  mix  and maturities of its assets and liabilities.  The essential
purposes  of  asset-liability management are to ensure adequate liquidity and to
maintain  an  appropriate  balance  between  interest  sensitive  assets  and
liabilities.  The  Bank  has established an Asset-Liability Management Committee
which  uses a variety of tools to analyze interest rate sensitivity, including a
static gap presentation and a simulation model.  A "static gap" presentation (as
in  the  above  table)  reflects the difference between total interest-sensitive
assets  and  liabilities within certain time periods.  While the static gap is a
widely-used measure of interest sensitivity, it is not, in management's opinion,
a true indicator of a company's sensitivity position.  It presents a static view
of  the  timing  of  maturities and repricing opportunities, without taking into
consideration  that  changes  in  interest  rates  do  not affect all assets and
liabilities  equally.  For  example,  rates  paid  on  a  substantial portion of
savings  and  core  time  deposits  may contractually change within a relatively
short time frame, but those rates are significantly less interest-sensitive than
market-based  rates  such  as  those  paid on non-core deposits.  Accordingly, a
liability  sensitive  gap  position  is  not  as  indicative of a company's true
interest sensitivity as would be the case for an organization which depends to a
greater  extent  on  purchased  funds  to  support earning assets.  Net interest
income  would  also be impacted by other significant factors in a given interest
rate  environment,  including  the  spread  between  the  prime  rate  and  the
incremental  borrowing  cost  and  the  volume  and mix of earning asset growth.
Accordingly, the Bank uses a simulation model, among other techniques, to assist
in  achieving  consistent  growth in net interest income while managing interest
rate  risk.  The  model  takes  into  account  interest  rate changes as well as
changes  in  the  mix and volume of assets and liabilities.  The model simulates
the  Company's  balance  sheet and income statement under several different rate
scenarios.  The  model's  inputs (such as interest rates and levels of loans and
deposits)  are  updated  as necessary throughout the year in order to maintain a
current  forecast as assumptions change.  The forecast presents information over
a  12  month period.  It reports a base case in which interest rates remain flat
and  reports  variations  that  occur when rates increase and decrease 100 basis
points.  According to the model, the Company is presently positioned so that net
interest  income  will increase slightly if interest rates rise in the near term
and  will  decrease  slightly  if  interest  rates  decline  in  the  near term.

SECURITIES
----------
     The  Company  maintains  a  portfolio  of  investment securities consisting
primarily of U.S. Treasury securities, U.S. government agencies, mortgage-backed
securities,  and  municipal securities.  The investment portfolio is designed to
enhance  liquidity  while  providing  acceptable rates of return.  The following
table  sets forth the carrying value of the investment securities of the Company
at  December 31, 1998, 1997, and 1996.  There were no investments categorized as
"held  to  maturity"  as  defined in Statement of Financial Accounting Standards
("SFAS")  115,  "Accounting  for  Certain  Investments  in  Debt  and  Equity
Securities".



<TABLE>
<CAPTION>


                         SECURITY PORTFOLIO COMPOSITION
                             (DOLLARS IN THOUSANDS)


                                            1998     1997     1996
                                           -------  -------  -------
<S>                                        <C>      <C>      <C>
     Available for Sale, at market value:
          U.S. Treasury                    $ 1,253  $ 2,750  $ 5,494
          U.S. government agencies           9,939   11,104    8,647
          Mortgage-backed                    5,421    7,251    3,746
          State and municipal               10,489    7,108      624
                                           -------  -------  -------
                                           $27,102  $28,213  $18,511
                                           =======  =======  =======
</TABLE>




     The  following  table  indicates  the  carrying  value  of  each investment
security  category  by  maturity  as of December 31, 1998.  The weighted average
yield  for  each  range  of  maturities at December 31, 1998 is also shown.  All
securities  are  classified  as "Available for Sale" as defined in SFAS No. 115.

<TABLE>
<CAPTION>


                                             SECURITY PORTFOLIO MATURITY SCHEDULE
                                                    (DOLLARS IN THOUSANDS)

                                               After 1, Within     After 5, Within
                              Within 1 Year          5 Years          10 Years          After 10 Years          Total
                            ------------------  ------------------  -----------------  ------------------  ------------------
                                     Weighted            Weighted            Weighted            Weighted            Weighted
                            Market    Average   Market    Average   Market    Average   Market    Average   Market    Average
                             Value     Yield     Value     Yield     Value     Yield     Value     Yield     Value     Yield
                            -------  ---------  -------  ---------  -------  ---------  -------  ---------  -------  ---------
<S>                         <C>      <C>        <C>      <C>        <C>      <C>        <C>      <C>        <C>      <C>
U. S. Treasury              $ 1,253      5.65%        -         -         -         -         -         -   $ 1,253      5.65%
U. S. Government agencies     1,277      5.05%    5,616      5.95%  $ 3,046      6.32%        -         -     9,939      5.94%
Mortgage-backed                  39      5.68%      720      5.68%      513      5.37%  $ 4,149      5.84%    5,421      5.76%
State and municipal (1)           -         -         -         -     2,566      7.03%    7,923      7.59%   10,489      7.45%
                            -------  ---------  -------  ---------  -------  ---------  -------  ---------  -------  ---------
     Total                  $ 2,569      5.27%  $ 6,336      5.92%  $ 6,125      6.54%  $12,072      6.99%  $27,102      6.47%
                            =======  =========  =======  =========  =======  =========  =======  =========  =======  =========
<FN>


     (1)  -  Yields  have  been  adjusted  to  a  tax  equivalent  basis  assuming  a  34%  Federal  tax  rate.
</TABLE>


          The weighted average yields shown in the previous table are calculated
on  the  basis  of  cost and effective yields for the scheduled maturity of each
security.  At  December  31,  1998,  the  market value of the Company's security
portfolio was $27.1 million compared to its amortized cost of $26.6 million.  At
year  end,  the  average  maturity  of the security portfolio was 6.9 years, the
average  duration  of  the portfolio was 4.9 years, and the average adjusted tax
equivalent  yield  on  the  portfolio  for  the year ended December 31, 1998 was
6.47%.  Certain  securities  contain  call provisions which could decrease their
anticipated  maturity.  Certain  securities  also  contain  rate  adjustment
provisions  which  could  either  increase  or  decrease  their  yields.

          Decisions  involving   securities   are   based   upon    management's
expectations  of  interest  rate  movements,   overall  market  conditions,  the
composition  and  structure of the balance sheet, and computer-based simulations
of  the  financial  impacts of alternative rate/maturity scenarios.  The Company
does  not purchase or hold securities for trading purposes.  However, securities
may be sold prior to their maturity as all securities in the Bank's portfolio at
December  31,  1998  were classified as "available for sale" and recorded on the
Company's  balance  sheet  at  market  value.


<PAGE>
------
LOANS
-----
          The  loan   portfolio   is  the  Company's  principal  earning  asset.
Management  believes  that  the  loan  portfolio is adequately diversified.  The
following  table  shows  the  composition  of the loan portfolio at December 31,
1998,  1997,  and  1996.

<TABLE>
<CAPTION>


                           LOAN PORTFOLIO COMPOSITION
                             (DOLLARS IN THOUSANDS)

                                            1998       1997       1996
                                          ---------  ---------  ---------
<S>                                       <C>        <C>        <C>
Commercial and industrial                 $ 24,100   $ 25,313   $ 21,775 
Real estate - commercial                    48,527     41,172     33,475 
Real estate - residential                   42,832     37,683     33,140 
Construction                                 6,463      3,685      4,518 
Installment and other consumer loans         5,656      7,819      7,031 
Consumer finance, net of unearned income     2,881      2,792      2,526 
Other loans, including overdrafts              210        291        227 
                                          ---------  ---------  ---------
                                           130,669    118,755    102,692 
Less - Allowance for loan losses            (1,827)    (1,728)    (1,487)
                                          ---------  ---------  ---------
Net loans                                 $128,842   $117,027   $101,205 
                                          =========  =========  =========
</TABLE>



          The  Company's  real  estate  loans  are  primarily  owner-occupied
commercial facilities and other loans secured by both commercial and residential
real  estate located within the Company's primary market area.  The Company does
not  actively  pursue  long-term, fixed rate mortgage loans for retention in its
loan  portfolio.  Commercial  loans  are spread through a variety of industries,
with  no  industry  or  group of related industries accounting for a significant
portion  of  the commercial loan portfolio.  These loans may be made on either a
secured  or  unsecured  basis.  When  taken,  collateral  consists  of  liens on
inventories,  receivables,  equipment,  and  furniture  and fixtures.  Unsecured
commercial  loans  are generally short-term with emphasis on repayment strengths
and  low debt-to-worth ratios.  At December 31, 1998, the Company had no foreign
loans.

          A  significant portion of the installment and other consumer loans are
secured  by  automobiles  and other personal assets.  Consumer finance loans are
those  originated by the Company's consumer finance subsidiary, Freedom Finance,
IncThese  loans  generally  carry  a higher risk of nonpayment than do the other
categories  of  loans,  but  the  increased  risk is substantially offset by the
smaller amounts of such loans and the higher rates charged thereon, as well as a
higher  allocation  of  the  allowance for loan losses related to Freedom's loan
portfolio.


<PAGE>

LOAN  MATURITY  AND  INTEREST  SENSITIVITY
------------------------------------------
          The  following  table  shows  the  maturity  distribution and interest
sensitivity  of  the  Company's  loan  portfolio  at  December  31,  1998.

<TABLE>
<CAPTION>


                         LOAN PORTFOLIO MATURITY SCHEDULE
                              (DOLLARS IN THOUSANDS)


                                                     Over 1,
                                           1 Year   Less Than     Over
                                          or Less    5 Years    5 Years    Total
                                          --------  ----------  --------  --------
<S>                                       <C>       <C>         <C>       <C>
MATURITY DISTRIBUTION:
Commercial and industrial                 $ 15,440  $    8,504  $    156  $ 24,100
Real estate - commercial                    10,220      37,570       737    48,527
Real estate - residential                   13,149      21,680     8,003    42,832
Construction, development                    3,124       3,339         -     6,463
Installment and other consumer loans         1,883       3,748        25     5,656
Consumer finance, net of unearned income     2,881           -         -     2,881
Other loans, including overdrafts              210           -         -       210
                                          --------  ----------  --------  --------
Total                                     $ 46,907  $   74,841  $  8,921  $130,669
                                          ========  ==========  ========  ========

INTEREST SENSITIVITY:
Total of loans with:
Predetermined interest rates              $  9,510  $   43,680  $    255  $ 53,445
Floating interest rates                     37,397      31,161     8,666    77,224
                                          --------  ----------  --------  --------
Total                                     $ 46,907  $   74,841  $  8,921  $130,669
                                          ========  ==========  ========  ========
</TABLE>

NONPERFORMING  ASSETS  AND  POTENTIAL  PROBLEM  LOANS
-----------------------------------------------------
          The  Company's  nonperforming  assets  consist  of loans on nonaccrual
basis,  loans which are contractually past due 90 days or more on which interest
is  still being accrued, and other real estate owned ("OREO").  Generally, loans
of  the  Bank are placed on nonaccrual status when loans become 90 days past due
as  to  principal  or  interest,  or when management believes, after considering
economic  and  business  conditions  and collection efforts, that the borrower's
financial  condition  is such that collection of the loan is doubtful.  Payments
of interest on loans which are classified as nonaccrual are recognized as income
when  received.  Loans  of the Finance Company are not classified as nonaccrual,
but  are charged-off when such become 150 days contractually past due or earlier
if  the  loan  is  deemed  uncollectible.

          At  December  31,  1998  and  1997, the Bank held no other real estate
owned acquired in partial or total satisfaction of problem loans.  There were no
loans  on nonaccrual at December 31, 1998 or 1997.  There were no impaired loans
at  December  31,  1998  or  1997.  Loans  past  due 90 days and greater totaled
$483,000  or  0.37%  of  gross loans at December 31, 1998 compared to $82,000 or
 .07% of gross loans at December 31, 1997.  The majority of past due loans amount
is  related  to  one  loan totaling $405,000 which was paid off in January 1999.

          Management  maintains a list of potential problem loans which includes
nonaccrual  loans,  loans past due in excess of 90 days which are still accruing
interest,  and  other  loans  which  are  credit  graded  (either internally, by
external  audits  or  regulatory  examinations) as "substandard", "doubtful", or
"loss".  A  loan  is  added  to  the  list  when  management  becomes  aware  of
information about possible credit problems of borrowers that causes doubts as to
the  ability  of such borrowers to comply with the current loan repayment terms.
The  total  amount  of  loans  outstanding at December 31, 1998 determined to be
potential  problem loans was $1.4 million or 1.05% of the loan portfolio at year
end,  compared  to  $1.0  million  or 0.9% of the loan portfolio at December 31,
1997.  The  amount  of  potential  problem  loans  at December 31, 1998 does not
represent  management's  estimate of potential losses since the majority of such
loans  are secured by real estate or other collateral.  Management believes that
the allowance for loan losses as of December 31, 1998 was adequate to absorb any
losses  related  to  the  nonperforming loans and problem loans as of that date.

          Management  continues  to  monitor closely the levels on nonperforming
and  potential problem loans and will address the weaknesses in these credits to
enhance  the  amount of ultimate collection or recovery on these assets.  Should
increases  in  the  overall  level  of nonperforming and potential problem loans
accelerate  from  the  current trend, management will adjust the methodology for
determining  the  allowance  for loan losses and will increase the provision for
loan  losses  accordingly.  This  would  likely  decrease  net  income.

PROVISION  AND  ALLOWANCE  FOR  LOAN  LOSSES,  LOAN  LOSS  EXPERIENCE
---------------------------------------------------------------------
          The  allowance  for  loan  losses  is  based  on management's periodic
evaluation  of  the  loan portfolio and reflects an amount that, in management's
opinion, is adequate to absorb probable losses inherent in the loan portfolio at
any  point in time.  The allowance is established through charges to earnings in
the form of a provision for loan losses.  Loan losses and recoveries are charged
or  credited directly to the allowance.  The amount charged to the provision for
loan  losses  by  the Company is based on management's judgment and is dependent
upon  growth  in  the  loan  portfolios;  the  total  amount  of past due loans;
nonperforming  loans; known loan deteriorations and/or concentrations of credit;
trends  in  portfolio  volume,  maturity  and  composition; projected collateral
values;  general  economic  conditions;  and management's assessment of probable
losses  based upon internal credit grading of the loans and periodic reviews and
assessments  of  credit  risk  associated  with  particular  loans.

          In  assessing  the  adequacy  of  the  allowance,  management  relies
predominately  on  its ongoing review of the loan portfolio, which is undertaken
both  to  ascertain  whether  there  are losses which must be charged-off and to
assess  the  risk  characteristics  of the portfolio in the aggregate.  The Bank
attempts  to  deal  with  repayment  risks  through  the  establishment  of, and
adherence to, internal credit policies.  These policies include loan officer and
credit  limits, periodic documentation examination, and follow-up procedures for
any  exceptions  to  credit  policies.  Loans that are determined to involve any
more  than the normal risk are placed in a special review status.  The Company's
methodology  for  evaluating  the  adequacy  of  the  allowance  for loan losses
consists  of  a   three-tiered  process.   The  first   tier  includes  specific
allocations  set aside for low rated credits as defined in the loan policy.  The
second  tier  is  the  general  allocation  for  problem  credits  and applies a
historical  loss  factor  to  pools  of loans in each of several loan ratings as
defined  in  the  policy.  Finally, the third tier is the unallocated portion of
the  allowance  which  applies  a  historical  loss  factor  to  the entire loan
portfolio,  not  previously  considered.     Undisbursed  commitments  are  also
evaluated  in  this  third tier.  The results of the three tiers are combined to
determine  the  required  allowance.

          On  December  31, 1998, the allowance for loan losses was $1.8 million
or  1.40%  of outstanding loans.  This is compared to $1.7 million allowance for
loan  losses  at  December  31, 1997 or 1.46% of outstanding loans at that date.
For  the  year  ended  December  31, 1998, the Company reported consolidated net
charge-offs  of  $191,000  or  .16%  of  average  loans.  This  is  compared  to
consolidated  net  charge-offs of $177,000 or .16% of average loans for the year
ended  December  31, 1997.  During 1998, the Company charged a total of $290,000
to  expense through its provision for loan losses, compared to $392,000 for 1997
and  $516,000  for  1996.  The  change  in  the provision each year was directly
related  to the level of net originations in each year as follows: $12.1 million
in  1998,  $15.7  million  in  1997,  and $25.9 million in 1996.  Another factor
influencing  the  amount  charged  to  the  provision  each  year  is  the total
outstanding  loans and charge-off activity of the Finance Company in relation to
the  consolidated  totals.  Loans  of  the Finance Company generally have higher
inherent  risk  than do loans of the Bank, and thus, require a higher provision.
Estimates  charged  to  the  provision for loan losses are based on management's
judgment as to the amount required to cover probable losses inherent in the loan
portfolio  and  are  adjusted  as  necessary.

          For the years ended December 31, 1998, 1997, and 1996, Summit National
Bank  recorded  a  provision for loan losses of $146,000, $216,000, and $361,000
respectively.  For  the  years ended December 31, 1998, 1997, and 1996, the Bank
experienced  net  charge-offs of $55,000, $1,000, and $29,000, respectively.  In
fiscal  1998, 1997, and 1996, Freedom Finance, Inc. recorded provisions for loan
losses of $144,000, $176,000, and $155,000, respectively.  For those same years,
Freedom  experienced  net  charge-offs  of  $136,000,  $176,000,  and  $125,000,
respectively.   The  change  in  net charge-offs and the related fluctuations in
this  subsidiary's provision is related to (1) the growth of number of branches,
accounts and loans outstanding, and (2) industry trends and general increases in
consumer  debt  and consumer bankruptcies.  Freedom's customers are generally in
the  low-to-moderate  income  group  of borrowers.  Over the past several years,
there  has  been  a  proliferation  of  small  consumer loan companies and other
consumer  debt  providers  competing  for pieces of this segment of the consumer
debt  market.  It is not unusual for customers of Freedom simultaneously to have
loans  outstanding  at  several other small loan companies which results in some
customers  incurring  more  debt  than  they  can  service.

          The  following  table  sets  forth certain information with respect to
changes  in  the  Company's  allowance for loan losses arising from charge-offs,
recoveries, and provision for the years ended December 31, 1998, 1997, and 1996.


<TABLE>
<CAPTION>


                         SUMMARY OF LOAN LOSS EXPERIENCE
                             (DOLLARS IN THOUSANDS)


                                 1998     1997     1996
                                -------  -------  -------
<S>                             <C>      <C>      <C>
Balance at beginning of period  $1,728   $1,487   $1,068 
                                -------  -------  -------
Charge-offs:
   Commercial & industrial          26       40       50 
   Installment & consumer          382      388      337 
                                -------  -------  -------
                                   408      428      387 
                                -------  -------  -------
Recoveries:
   Commercial & industrial          25       55       17 
   Installment & consumer          192      196      216 
                                -------  -------  -------
                                   217      251      233 
                                -------  -------  -------
Net charge-offs                   (191)    (177)    (154)
Provision charged to expense       290      392      516 
Allocation for purchased loans       -       26       57 
                                -------  -------  -------
Balance at end of period        $1,827   $1,728   $1,487 
                                =======  =======  =======
Ratio of net charge-offs to
 average loans                     .16%     .16%     .17%
                                =======  =======  =======
Ratio of allowance for loan
 losses to gross loans            1.40%    1.46%    1.43%
                                =======  =======  =======
Ratio of net charge-offs to
 allowance for loan losses       10.45%   10.24%   10.36%
                                =======  =======  =======
</TABLE>



     Management  considers  the  allowance  for  loan  losses  adequate to cover
probable  losses  inherent  in  the loan portfolio at December 31, 1998.  In the
opinion  of  management,  there  are  no  material  risks  or  significant  loan
concentrations,  and  the  allowance  for loan losses is adequate to absorb loan
losses  in  the  present  portfolios.  It  must be emphasized, however, that the
determination  of  the  allowance for loan losses using the Company's procedures
and  methods  rests  upon  various  judgments  and  assumptions  about  economic
conditions  and other factors affecting loans.  While it is the Company's policy
to  provide  for loan losses in the current period in which a loss is considered
probable, there are additional risks of future losses which cannot be quantified
precisely  or attributed to particular loans or classes of loans.  Because these
risks  include  the  state  of  the  economy,  industry  trends,  and conditions
affecting  individual  borrowers,  management's  judgement  of  the allowance is
necessarily  approximate  and  imprecise.  No  assurance  can  be given that the
Company  will  not  in  any particular period sustain loan losses which would be
sizable  in relationship to the amount reserved or that subsequent evaluation of
the loan portfolio, in light of conditions and factors then prevailing, will not
require  significant  changes in the allowance for loan losses or future charges
to  earnings.  The  allowance  for  loan  losses  is  also subject to review and
approval  by  various regulatory agencies through their periodic examinations of
the  Company's subsidiaries.  Such examinations could result in required changes
to  the allowance for loan losses.  Summit National Bank was examined in October
1998  by  the  Office of the Comptroller of the Currency.  No adjustments in the
allowance  or  significant  adjustments  to the Bank's internal classified loans
were  made  as  a  result  of  this  examination.

COMPOSITION  OF  ALLOWANCE  FOR  LOAN  LOSSES
---------------------------------------------
     The table below presents an allocation of the allowance for loan losses for
the  years  ended  December  31,  1998,  1997,  and  1996, by the different loan
categories.  However,  the breakdown is based on a number of qualitative factors
and the amounts presented are not necessarily indicative of actual amounts which
will  be  charged  to any particular category.  Any unallocated reserve has been
included  within  the  various  loan  categories  in  the  table  below.

<TABLE>
<CAPTION>


                                     ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
                                              (DOLLARS IN THOUSANDS)

                                                 1998                     1997                     1996
                                        -----------------------  ----------------------  -----------------------
                                                    Percent of               Percent of               Percent of
                                        Allowance    Loans in    Allowance    Loans in    Allowance    Loans in
                                        Breakdown    Category    Breakdown    Category    Breakdown    Category
                                        ----------  -----------  ----------  -----------  ----------  -----------
<S>                                     <C>         <C>          <C>         <C>          <C>         <C>
Commercial and industrial               $      337       18.44%  $      368       21.32%  $      313       21.07%
Real estate - commercial                       679       37.14%         599       34.67%         482       32.39%
Real estate - residential                      599       32.78%         548       31.73%         477       32.07%
Construction                                    90        4.95%          54        3.10%          65        4.37%
Installment and consumer finance loans         119        6.53%         154        8.93%         147        9.89%
Other loans, including overdrafts                3        0.16%           5        0.25%           3        0.22%
                                        ----------  -----------  ----------  -----------  ----------  -----------
                                        $    1,827      100.00%  $    1,728      100.00%  $    1,487      100.00%
                                        ==========  ===========  ==========  ===========  ==========  ===========

</TABLE>



DEPOSITS
--------
     The  Company  has  a  large,  stable  base  of  time  deposits, principally
certificates  of deposit and individual savings and retirement accounts obtained
primarily  from  customers  in  South  Carolina.  The  Company does not purchase
brokered  deposits.  At  December 31, 1998, the Company had no foreign deposits.

     The  maturity distribution of certificates of deposit greater than or equal
to  $100,000  as  of  December  31,  1998  is as follows (dollars in thousands):
<TABLE>
<CAPTION>



<S>                                                 <C>   
3 months or less                                    $9,836
Greater than 3, but less than or equal to 6 months   3,895
Greater than 6, but less than or equal to 12 months  3,105
Greater than 12 months                                 965
                                                     -----
                                                   $17,801
                                                   =======
</TABLE>





RETURN  ON  EQUITY  AND  ASSETS
-------------------------------
     The  return  on  average  shareholders' equity ratio (net income divided by
average total equity) and the return on average assets ratio (net income divided
by  average  total assets) for the years ended December 31, 1998, 1997, and 1996
are  presented in the following table.  The Company has not paid a cash dividend
since  its  inception.  The  holders  of  common  stock  are entitled to receive
dividends when and as declared by the Board of Directors.  The Company's present
policy  is  to  retain  all earnings for the operation of the Company until such
time  as  future  earnings  support  cash  dividend  payments.

<TABLE>
<CAPTION>


                                      For the Year Ended December 31,
                                      -------------------------------
                                               1998    1997   1996
                                              ------  ------  -----
<S>                                           <C>     <C>     <C>
Return on average assets                       1.14%   1.05%  0.82%
Return on average shareholders' equity        13.14%  12.60%  9.07%
Average shareholders' equity as a percent of
  average assets                               8.68%   8.35%  9.05%

</TABLE>




ITEM  2.  PROPERTIES

     The  operations  of the Company and the Bank do not require any substantial
investment  in  fixed  assets.  The principal executive offices for the Company,
the  Bank  and  the Finance Company are located at 937 North Pleasantburg Drive,
Greenville,  South  Carolina.  In addition, this site serves as the Bank's  main
branch.  The  building  at  this  location is approximately 7,500 square feet in
area  and  is  situated on a one-acre lot.  The Company executed a lease for the
land  and  building  and  assigned the lease to the Bank effective on the Bank's
commencement  of  operations.  The  initial term of the lease commenced April 1,
1990  and  renewal options were exercised in April 1995 and September 1998.  The
term on the renewal of the lease is five years and the Company has an additional
option  to renew for a five-year period under substantially the same terms.  The
lease  provides  that  the  Company will be responsible for real property taxes,
insurance, utilities and maintenance with respect to the premises.  During 1995,
the  Bank  completed  construction  on  approximately  .63 acres of land at 2201
Augusta Road, Greenville, South Carolina of its second full service bank branch.
The  facility is approximately 6,500 square feet and is fully owned and occupied
by  the  Bank.  During  April  of 1998, the Company entered into an agreement to
lease  a  facility  for  a  branch located at 800 East North Street, Greenville,
South  Carolina.  This  facility,  which was occupied in October 1998, serves as
the  third  full service bank branch and as the Bank's operations facility.  The
facility  is  approximately  8,000  square feet and has an initial lease term of
seven  years.  This  agreement includes a renewal option for an additional seven
year  period.

     The eleven Finance Company branches throughout South Carolina are housed in
leased  facilities  averaging 1,200 square feet each with lease terms from three
to  ten  years.  The  lease  agreements  have  various  renewal  options  under
substantially  the  same  terms  as  the  original  agreements.

ITEM  3.  LEGAL  PROCEEDINGS

     Although  the  Company  is  from  time  to  time  a  party to various legal
proceedings  arising out of the ordinary course of business, management believes
there  is  no litigation or proceeding threatened or pending against the Company
that could reasonably be expected to result in a material  adverse change in the
business  or  financial  condition  of  the  Company.


ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     There were no matters submitted to a vote of the shareholders in the fourth
quarter  of  the  Company's  fiscal  year  ending  December  31,  1998.


                                     PART II

ITEM  5.     MARKET  FOR  THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

     Summit  Financial  Corporation's  common  stock  is traded in the Small-Cap
market  on  the NASDAQ system under the symbol SUMM.  As of March 10, 1999 there
were  approximately  410 shareholders of record of the common stock.  The number
of  shareholders  does  not  reflect  the number of persons or entities who hold
their  stock  in  nominee  or  "street"  name  through  various brokerage firms.

     The following table presents the high, low and closing sales prices for the
Company's common stock for each full quarterly period within the two most recent
fiscal  years.  The  source for the following information was the Nasdaq market.

<TABLE>
<CAPTION>


                                  QUARTERLY COMMON STOCK SUMMARY

                                   1998                                        1997
                         ----------------------------------   -----------------------------------
                           4Q       3Q       2Q       1Q        4Q        3Q       2Q       1Q
                         -------  -------  -------  -------  --------  --------  -------  -------
Stock Price ranges: (1)
<S>                      <C>      <C>      <C>      <C>      <C>       <C>       <C>      <C>
    High                 $ 17.00  $ 15.95  $ 15.60  $ 15.24  $  13.33  $   9.30  $  7.48  $  7.09
    Low                  $ 12.38  $ 10.48  $ 13.81  $ 12.14  $   8.16  $   6.35  $  6.58  $  5.90
    Close                $ 14.50  $ 15.00  $ 14.64  $ 15.18  $  11.79  $   9.07  $  6.92  $  7.00
Volume Traded             76,704   81,850   86,061   66,571   144,644   107,112   33,943   97,106

<FN>

(1) Share data have been restated to reflect seven 5% stock distributions issued between 1993 and
1998  and  the  two-for-one  stock  split  in  August  1998.
</TABLE>

     The  Company  has not paid any cash dividends.  The holders of common stock
are  entitled  to  receive  dividends  when  and  as  declared  by  the Board of
Directors.  The  Company's  present  policy  is  to  retain all earnings for the
operation  of  the  Company  until  such  time  as  future earnings support cash
dividend  payments.  Accordingly,  the  Company  does not anticipate paying cash
dividends  in the foreseeable future.  For information on dividend restrictions,
refer to Part II, Item 8. "Financial Statements and Supplementary Data", Note 17
under  Notes  to  Consolidated  Financial  Statements.



<PAGE>
ITEM  6.     SELECTED  FINANCIAL  DATA

     The  information  presented  below  should  be read in conjunction with the
consolidated  financial  statements,  the  notes  thereto  and  "Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of Operations"
contained  under  Item  7  of  this  report.

<TABLE>
<CAPTION>


                      SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
                      ----------------------------------------------
                    (All Amounts, Except Per Share Data, In Thousands)


                                       1998       1997       1996       1995       1994
                                     ---------  ---------  ---------  ---------  --------
INCOME STATEMENT DATA
<S>                                  <C>        <C>        <C>        <C>        <C>
Net interest income                  $  7,614   $  6,977   $  5,583   $  3,976   $ 2,942 
Provision for loan losses                 290        392        516        277       168 
Other income                            1,408      1,035        980        611       345 
Other expenses                          5,826      5,150      4,401      3,469     2,348 
Provision for income taxes              1,011        895        644        312       109 
Net income                              1,895      1,575      1,002        529       661 

PER SHARE DATA: (1)
Basic net income                     $   0.63   $   0.53   $   0.34   $   0.18   $  0.22 
Diluted net income                   $   0.53   $   0.48   $   0.31   $   0.17   $  .021 
Book value per share                 $   5.16   $   4.43   $   3.96   $   3.63   $  3.36 
Closing market price per share       $  14.50   $  11.79   $   6.59   $   5.76   $  4.90 

BALANCE SHEET DATA (YEAR END)
Total assets                         $170,485   $160,279   $134,162   $115,072   $83,656 
Loans, net of unearned income         130,669    118,755    102,692     75,712    60,272 
Allowance for loan losses               1,827      1,728      1,487      1,068       822 
Total earning assets                  159,586    151,300    126,762    107,730    79,704 
Deposits                              140,243    140,928    117,805     99,319    67,348 
Long-term debt                          5,000          -          -          -         - 
Shareholders' equity                   15,674     13,369     11,637     10,664     9,846 

BALANCE SHEET DATA (AVERAGES)
Total assets                         $166,432   $149,662   $121,997   $ 95,286   $78,532 
Loans, net of unearned income         120,488    110,812     88,482     66,451    54,233 
Total earning assets                  158,048    142,561    116,037     90,118    74,778 
Deposits                              143,399    131,249    106,363     80,670    66,262 
Shareholders' equity                   14,424     12,500     11,047     10,286     9,615 

FINANCIAL RATIOS
Return on average assets                 1.14%      1.05%      0.82%      0.56%     0.84%
Return on average equity                13.14%     12.60%      9.07%      5.14%     6.88%
Net interest margin                      4.95%      4.94%      4.81%      4.41%     3.93%
Tier 1 risk-based capital               10.91%     10.43%     10.79%     12.62%    16.14%
Total risk-based capital                12.16%     11.68%     12.17%     13.80%    17.23%

ASSET QUALITY RATIOS
Allowance for loan losses to loans       1.40%      1.46%      1.43%      1.41%     1.36%
Net charge-offs to average loans          .16%       .16%       .17%       .09%      .11%
Nonperforming assets                        -          -   $    110          -   $    37 
<FN>

(1) All per share data has been restated to reflect all 5% stock distributions issued and
the  two-for-one  stock  split  in  August  1998.
</TABLE>


ITEM  7.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
RESULTS  OF  OPERATIONS

     The  following  discussion  is  presented  to  provide  the  reader with an
understanding  of  the  financial  condition and results of operations of Summit
Financial  Corporation  and  its  subsidiaries, Summit National Bank and Freedom
Finance,  Inc.

     Summit  Financial  Corporation  (the  "Company") is a financial institution
holding company headquartered in Greenville, South Carolina.  The Company offers
a  broad range of financial services through its wholly-owned subsidiary, Summit
National  Bank  (the  "Bank,"  "Summit").  The  Bank  is  a nationally chartered
commercial  bank  which  operates  principally in the Upstate of South Carolina.
The  Bank  received its charter and commenced operations in July 1990.  In 1997,
the  Bank  incorporated  Summit  Investment  Services,  Inc.  as  a wholly-owned
subsidiary  to  provide  a  wider  range  of  investment  products and financial
planning  services.  The  Bank  currently  has  three  full  service  offices in
Greenville, South Carolina.  Summit provides a full range of banking services to
individuals  and  businesses,  including the taking of time and demand deposits,
making  loans, and offering nondeposit investment services.  The Bank emphasizes
close  personal contact with its customers and strives to provide a consistently
high  level  of  service  to  both  individual  and  corporate  customers.

     Freedom  Finance, Inc. ("Freedom," the "Finance Company") is a wholly-owned
subsidiary  of  the  Company  which  is  operating as a consumer finance company
headquartered  in  Greenville,  South  Carolina.  The  Finance Company primarily
makes  and services installment loans to individuals with loan principal amounts
generally  not  exceeding  $1,500  and  with  maturities  ranging  from three to
eighteen  months.  Freedom  operates  eleven branches throughout South Carolina.

BALANCE  SHEET  REVIEW

GENERAL
     As  of  December 31, 1998, total assets and total gross loans had increased
6%  and  10%,  respectively,  as  compared to 1997 while total deposits remained
fairly  constant  during the same period.  During the same period, federal funds
sold decreased $2.5 million or 86% and federal funds purchased and FHLB advances
increased  $2.8  million  and  $6  million,  respectively.

     On  August  24,  1998,  the  Company issued a two-for-one stock split which
resulted  in  the  issuance of 1,444,299 shares of common stock.  The stated par
value  of  each share was not changed from $1.  On December 28, 1998, a 5% stock
distribution  in  the  form  of  a  stock dividend was issued to shareholders of
record  as  of December 14, 1998.  This distribution resulted in the issuance of
144,550  shares  of  the  Company's  $1.00 par value common stock.  All weighted
average  share  and  per share data has been restated to reflect the stock split
and  stock  distribution.

LOANS
     The  loan  portfolio consists primarily of commercial and industrial loans;
commercial  loans  secured  by  real estate; loans secured by one-to-four family
residential mortgages; and consumer loans.  Substantially all of these loans are
located  in  the Upstate of South Carolina and are concentrated in the Company's
market  area.  At  December  31,  1998,  the  Company  had  no  loans for highly
leveraged  transactions and no foreign loans.  The Bank's primary focus has been
on  commercial  lending to small and medium-sized businesses in its marketplace.
Commercial loans are spread throughout a variety of industries, with no industry
or  group  of  related  industries  accounting  for a significant portion of the
commercial  loan  portfolio.

     As  of  December  31, 1998, the Company had total loans outstanding, net of
unearned  income,  of  $130.7  million  which  represents  an  increase of $11.9
million  or  10% from the 1997 outstanding loans of $118.8 million.  Outstanding
loans  represent  the  largest  component  of  earning  assets at 76% of average
earning assets for 1998 compared to 78% for 1997.  Gross loans were 77% and 74%,
respectively,  of  total assets at December 31, 1998 and 1997.  The 10% increase
in loans between 1997 and 1998 is attributable to internal growth as the Company
did not purchase any loans during the year.  Freedom's outstanding loans, net of
unearned income, totaled $2.9 million, or 2.2% of consolidated loans at December
31,  1998.  This  is  compared  to $2.8 million or 2.4% of consolidated loans at
December  31,  1997.

     For  1998,  the  Company's  loans  averaged  $120.5 million with a yield of
10.19%.  This is compared to $110.8 million average loans with a yield of 10.37%
in  1997.  The  interest rates charged on loans of the Bank vary with the degree
of  risk,  maturity and amount of the loan.  Competitive pressures, money market
rates,  availability  of  funds,  and  government  policy  and  regulations also
influence  interest  rates.  Loans  of  the  Finance Company are regulated under
state  laws which establish the maximum loan amounts and interest rates, and the
types  and maximum amounts of fees, insurance premiums, and other costs that may
be  charged.  The  decrease  in  the loan yield during 1998 reflects the general
declining  rate  environment  experienced in the fourth quarter of 1998 at which
time  the  prime lending rate dropped 75 basis points.  Approximately 63% of the
Bank's  loan  portfolio and 62% of the consolidated loan portfolio have variable
rates  and  immediately  reprice  with  a change in the prime rate.  The drop in
prime  during 1998 is combined with the continuing competitive pricing pressures
on  loans  of  the Company to reduce the overall yield on loans during the year.

     The allowance for loan losses is established through charges in the form of
a  provision for loan losses. Loan losses and recoveries are charged or credited
directly  to the allowance.  The amount charged to the provision for loan losses
by  the Bank and the Finance Company is based on management's judgment as to the
amounts required to maintain an adequate allowance.  The level of this allowance
is  dependent  upon  growth in the loan portfolios; the total amount of past due
loans;  nonperforming loans; and known loan deteriorations and/or concentrations
of  credit.  Other  factors  affecting  the  allowance  are  trends in portfolio
volume,  maturity  and  composition;  projected  collateral  values; and general
economic conditions.  Finally, management's assessment of potential losses based
upon  internal  credit grading of the loans and periodic reviews and assessments
of  credit  risk  associated with particular loans is considered in establishing
the  allowance  amount.

     Management  maintains  an  allowance  for  loan  losses  which  it believes
adequate  to cover inherent losses in the loan portfolio.  However, management's
judgment  is  based  upon  a number of assumptions about future events which are
believed  to  be  reasonable,  but  which may or may not prove valid.  There are
risks  of  future  losses  which cannot be quantified precisely or attributed to
particular  loans  or  classes  of  loans.  Management uses the best information
available  to make evaluations, however, future adjustments to the allowance may
be  necessary  if  economic conditions differ substantially from the assumptions
used  in  making  evaluations.  The  Company  is  also  subject  to  regulatory
examinations  and  determinations as to the adequacy of the allowance, which may
take  into  account  such  factors  as  the  methodology  used  to calculate the
allowance for loan losses and the size of the allowance in comparison to a group
of  peer  companies  identified  by  the  regulatory  agencies.

     The  allowance for loan losses totaled $1.8 million or 1.40% of total loans
at  the  end  of 1998.  This is compared to a $1.7 million allowance or 1.46% of
total  loans  at  December  31, 1997.  For the year ended December 31, 1998, the
Company  reported  net  charge-offs of $191,000 or 0.16% of consolidated average
loans.  This is compared to consolidated net charge-offs of $177,000 or 0.16% of
average  loans  for  the  year  ended  December  31,  1997.

     Loans past due 90 days and greater totaled $483,000 or 0.36% of gross loans
at  December 31, 1998 compared to $82,000 or .07% of gross loans at December 31,
1997.  There  were  no  loans on nonaccrual at either December 31, 1998 or 1997.
Generally,  loans  of the Bank are placed on nonaccrual status at the earlier of
when  they  are  90  days  past  due  or when the collection of the loan becomes
doubtful.  Loans  of  the  Finance Company are not classified as nonaccrual, but
are  charged-off  when such become 150 days contractually past due or earlier if
the  loan is deemed uncollectible.  At December 31, 1998 and 1997, the Bank held
no  other real estate owned acquired in partial or total satisfaction of problem
loans.  There  were  no  impaired  loans  at  either  December 31, 1998 or 1997.

DEPOSITS
     During  1998,  interest-bearing liabilities averaged $132.3 million with an
average  rate  of 5.14% compared to $121.2 million with an average rate of 5.28%
in 1997.  The decrease in the average rate is primarily a result of maturing CDs
at  higher  rates  that  were  replaced  with lower current market rates and the
general  restructuring  of  the deposit portfolio with increases in money market
and  demand accounts which have a lower cost of funds.  In pricing deposits, the
Company  considers  its  liquidity  needs,  the direction and levels of interest
rates  and  local  market  conditions.  At  December  31, 1998, interest-bearing
deposits  comprised  approximately  85%  of  total  deposits  and  78%  of
interest-bearing  liabilities.  The  remainder  of  interest-bearing liabilities
consists  principally  of  Federal  Home  Loan  Bank  advances,  federal  funds
purchased,  and  securities  sold  under  repurchase  agreements.

     The  Company  uses  its deposit base as a primary source with which to fund
earning  assets.  Deposits decreased from $140.9 million at December 31, 1997 to
$140.2  million as of year end 1998.  The decline was anticipated as the Company
focused  on  restructuring  its  deposits  to  replace  certificates  of deposit
maturities  with  lower cost demand and money market accounts.  In addition, the
Company  utilized  excess  liquidity and other financing strategies to fund loan
growth  and maintain its net interest margin during a period of declining rates.

     The  Company's  core deposit base consists of consumer and commercial money
market  accounts,  checking  accounts,  savings  and  retirement  accounts,  NOW
accounts,  and non-jumbo time deposits (less than $100,000).  Although such core
deposits  are  becoming increasingly interest sensitive for both the Company and
the  industry  as a whole, these deposits continue to provide the Company with a
large  and  stable  source  of  funds.  Core  deposits  as a percentage of total
deposits  were approximately 87% and 79%, respectively, at December 31, 1998 and
1997.  The  Company  closely  monitors  its  reliance on certificates of deposit
greater  than  $100,000,  which  are  generally  considered less stable and more
interest  rate  sensitive than core deposits.  Certificates of deposit in excess
of $100,000 represented 13% and 21%, respectively, of total deposits at December
31,  1998  and  1997.  The  Company  has  no  brokered  deposits.

INVESTMENT  SECURITIES
     At December 31, 1998, the Company's total investment portfolio had a market
value  of  $27.1  million,  which  is  a  decrease  of 4% from the $28.2 million
invested  as  of the end of 1997.  Investments had an amortized cost at the 1998
year  end  of  $26.6  million.  The  investment  portfolio consists primarily of
United  States  Treasury  securities,  securities  of  United  States government
agencies,  mortgage-backed securities, and state and municipal obligations.  The
Company  has no trading account securities.  At the 1998 year end, the portfolio
had  a  weighted  average  maturity  of  approximately  6.9 years and an average
duration  of  4.9  years.  Investment securities averaged $27.5 million yielding
6.47%  in  1998,  compared  to the 1997 average of $21.3 million yielding 6.47%.
Securities are the second largest earning asset of the Company at 17% and 15% of
average  earning  assets  for  1998  and  1997,  respectively.


<PAGE>
INCOME  STATEMENT  REVIEW

GENERAL
     The  Company  reported record earnings in 1998 which were up 20% from 1997.
Net  income  totaled  $1.9 million, or $0.53 diluted earnings per share, in 1998
compared with $1.6 million, or $0.48 diluted earnings per share in 1997 and $1.0
million  or  $0.31  diluted earnings per share for 1996.  The improvement in net
income  and earnings per share between 1997 and 1998 resulted primarily from the
growth in earning assets combined with a reduction in the overall cost of funds.
Increases  in  other income, primarily nondeposit investment product sales, also
contributed  to  the  increase  in  net  income  in  1998.

<TABLE>
<CAPTION>


                                INCOME STATEMENT REVIEW
                                   SUMMARY OF CHANGES

                                         For the Years Ended December 31,
                                         --------------------------------
                                          CHANGE                   CHANGE
                                       ------------            --------------
                              1998      $       %      1997       $       %      1996
                            --------  ------  -----  --------  -------  -----  --------
<S>                         <C>       <C>     <C>    <C>       <C>      <C>    <C>
Net interest income         $ 7,614   $ 637      9%  $ 6,977   $1,394     25%  $ 5,583 
Provision for loan losses      (290)   (102)  (26)%     (392)    (124)  (24)%     (516)
                            --------  ------  -----  --------  -------  -----  --------
Net interest income                                                                    
  after provision             7,324     739     11%    6,585    1,518     30%    5,067 
Other income                  1,408     373     36%    1,035       55      6%      980 
Other expense                (5,826)    676     13%   (5,150)     749     17%   (4,401)
                            --------  ------  -----  --------  -------  -----  --------
Income before taxes           2,906     436     18%    2,470      824     50%    1,646 
Provision for income taxes   (1,011)    116     13%     (895)     251     39%     (644)
                            --------  ------  -----  --------  -------  -----  --------
Net income                  $ 1,895   $ 320     20%  $ 1,575   $  573     57%  $ 1,002 
                            ========  ======  =====  ========  =======  =====  ========

</TABLE>


NET  INTEREST  INCOME
     Net interest income is the difference between the interest earned on assets
and  the  interest paid for the liabilities used to support those assets.  It is
the  largest  component  of  the  Company's  earnings and changes in it have the
greatest  impact  on net income.  Variations in the volume and mix of assets and
liabilities  and their relative sensitivity to interest rate movements determine
changes  in  net  interest  income.

     During 1998, the Company recorded net interest income of $7.6 million, a 9%
increase from the 1997 net interest income of $7.0 million.  This is compared to
net  interest  income  of  $5.6  million for 1996.  The increase in net interest
income  in  1998  is  directly  related  to the increase in the average loan and
deposit  volume  of  the  Bank of 9% and 10%, respectively.  Net interest income
increased  in 1997 also related to the higher average loan and deposit volume of
the  Bank  which  was  up  from  1996  by  25%  and  24%,  respectively.

     For the year ended December 31, 1998, the Company's net interest margin was
4.95%, compared to 4.94% in 1997 and 4.81% for 1996.  The net interest margin is
calculated as net interest income divided by average earning assets.  The margin
for  1998  remained relatively constant with the prior year due primarily to the
reduction  in  the  cost  of  funds  which offset the declining rate environment
experienced  as  the prime rate decreased 75 basis points to 7.75% in the fourth
quarter  of 1998.  The increase in the net interest margin between 1996 and 1997
is  related  to  the  general  rising rate environment during that period as the
prime  rate  increased  from  8.25%  to  8.50%  in  March  1997.

<PAGE>

<TABLE>
<CAPTION>


                      AVERAGE YIELDS AND RATES

                                   For the Years Ended December 31,
                                   --------------------------------
(on a fully tax-equivalent basis)          1998    1997    1996
                                          ------  ------  ------
<S>                                       <C>     <C>     <C>
EARNING ASSETS:
Loans                                     10.19%  10.37%  10.09%
Securities                                 6.47%   6.47%   6.05%
Short-term investments                     5.70%   5.57%   5.58%
                                          ------  ------  ------
     Total earning assets                  9.26%   9.43%   9.09%
                                          ------  ------  ------
INTEREST-BEARING LIABILITIES:
Interest-bearing deposits                  5.11%   5.25%   5.05%
Short-term borrowings                      6.07%   6.21%   5.72%
FHLB advances                              5.67%   6.52%   6.55%
                                          ------  ------  ------
     Total interest-bearing liabilities    5.14%   5.28%   5.09%
                                          ------  ------  ------
NET INTEREST MARGIN                        4.95%   4.94%   4.81%
                                          ======  ======  ======
PRIME INTEREST RATE                        8.36%   8.44%   8.27%
                                          ======  ======  ======
</TABLE>


INTEREST  INCOME
     Interest  income  for 1998 was $14.4 million which was a $1.0 million or 8%
increase  over  the  $13.4 million for 1997.  Interest income for 1996 was $10.5
million.  The  increases each year are primarily a result of the higher level of
earning  assets which averaged $158.0 million, $142.6 million and $116.0 million
in  1998,  1997  and  1996,  respectively.  Changes  in average yield on earning
assets  also  affects the interest income reported each year.  The average yield
increased  from  9.09% in 1996 to 9.43% in 1997, while the average yield dropped
to  9.26%  in  1998  due  to  the  declining  rate  environment.

     The  majority  of  the  increase in average earning assets between 1996 and
1997  and  between  1997  and 1998 was in loans, which are the Company's highest
yielding  assets  at  approximately  76%  of average earning assets for the year
ended  1998.  Consolidated loans averaged $120.5 million in 1998 with an average
yield  of  10.19%,  compared  to $110.8 million in 1997 with an average yield of
10.37%,  and  $88.5 million in 1996 with an average yield of 10.09%.  The higher
loan yield in 1997 as compared to 1996 results from the increase in market rates
and  higher  pricing  on  new  loan originations in 1997.  The average loan rate
dropped  in  1998  as  compared to 1997 as a direct result of the decline in the
prime  rate  which  averaged 8.44% in 1997 and 8.36% in 1998.  Combined with the
general  declining  rate environment in 1998 were continuing competitive pricing
pressures  in  the  marketplace.

     The  second largest component of earning assets is the Company's investment
portfolio which averaged $27.5 million yielding 6.47% in 1998.  This is compared
to average securities of $21.3 million in 1997 yielding 6.47%, and $21.2 million
yielding  6.05%  for  1996.  The increase in the average yield of the investment
portfolio  is  related  to  the  timing,  maturity  distribution  and  types  of
securities  purchased.  Specifically in 1997, tax-free municipal securities were
purchased  which contributed significantly to the increase in average yield on a
fully  tax-equivalent basis for 1997 as compared to the prior years.  The higher
level  of  average  securities each year, combined with the increases in average
rate, resulted in an increase in interest income on investments of $38,000 or 3%
between 1996 and 1997 and the increase of $260,000 or 20% between 1997 and 1998.

INTEREST  EXPENSE
     The  Company's interest expense for 1998 was $6.8 million, compared to $6.4
million for 1997 and $5.0 million for 1996.  The increase in interest expense of
6%  between  1997 and 1998 and 29% between 1996 and 1997 is primarily related to
the  10%  and 24% increase in the average volume of interest-bearing liabilities
in  1998 and 1997, respectively.  The decrease of 14 basis points in the average
rate  on  interest-bearing  liabilities  in  1998  partially  offset  the higher
interest expense related to the increased volume of interest-bearing liabilities
in  that  year.  The  lower  average  rate in 1998 was primarily a result of the
maturity  of  higher  priced  CDs  combined  with the restructure of the deposit
portfolio  to lower costing money market deposits.  Interest-bearing liabilities
averaged  $132.3  million  in  1998  with  an average rate of 5.14%, compared to
$121.2  million  in  1997 with an average rate of 5.28%, and an average of $97.5
million  with  an  average  rate  of  5.09%  during  1996.

PROVISION  FOR  LOAN  LOSSES
     The  provision  for loan losses was $290,000 in 1998, $392,000 in 1997, and
$516,000 in 1996.  The change in the provision each year was directly related to
the  level  of  net originations in each year as follows: $12.1 million in 1998,
$15.7  million  in  1997, and $25.9 million in 1996.  Another factor influencing
the amount charged to the provision each year is the total outstanding loans and
charge-off  activity  of  the  Finance  Company  in relation to the consolidated
totals.  Loans  of  the Finance Company generally have higher inherent risk than
do  loans of the Bank, and thus, require a higher provision.   Estimates charged
to  the  provision  for loan losses are based on management's judgment as to the
amount  required to cover inherent losses in the loan portfolio and are adjusted
as  necessary.

OTHER  INCOME  AND  OTHER  EXPENSES
     Other  income  increased $373,000 or 36%, to $1.4 million in 1998 from $1.0
million  in 1997 and $980,000 in 1996.  Credit card related fees and income, the
largest  single item in other income, rose 20% to $298,000 in 1998 from $248,000
in  1997  and $217,000 in 1996.  The increase is related to the higher volume of
transactions  and  merchant  activity  in  the Bank's credit card portfolio each
year.  The  higher amount in service charges and fees on deposit accounts, which
increased  5% in 1998 to $203,000 from $194,000 in 1997 and $174,000 in 1996, is
related  to the increase in the number of Bank deposit accounts and transactions
subject  to  service  charges  and  fees.

     Insurance commission fee income increased $94,000 between 1997 and 1998 and
$11,000  between  1996 and 1997 related to the higher level of activity for both
the  Bank  and the Finance Company.  Included in insurance commissions is income
from annuity sales made in the Bank's nondeposit investment sales department and
earned commissions on credit-related insurance products generated by the Finance
Company.  The  remainder  of  the changes in other income is related to (1) late
charge  income  on  loans  of  the  Bank and the Finance Company which increased
$28,000 in 1997 and $35,000 in 1998 related to the higher number of branches and
customer  accounts;  and  (2)  the  level  of  activity in the Bank's nondeposit
financial  services  and brokerage department which resulted in increased income
in  1998  of  $73,000,  and  a  decrease  in  1997  of  $74,000.

     Total  other  expenses were $5.8 million in 1998, $5.2 million in 1997, and
$4.4  million  in  1996.  A  majority  of  the  increased expenditures each year
reflects  the cost of additional personnel hired to support the Company's growth
and  the  new bank branch opened in 1998.  Salaries, wages and benefits amounted
to  $3.2  million  in 1998, $2.7 million in 1997, and $2.3 million in 1996.  The
increase  of  $441,000 in 1998 was a result of (1) normal annual raises; (2) the
Bank  increasing the total number of employees related to the opening of the new
branch  in  October  1998;  (3) higher commissions paid related to the increased
volume of nondeposit product sales in 1998; (4) the amortization of compensation
expense  related  to  restricted  stock granted in late 1997; and (5) additional
benefit  accruals  pursuant  to  a new retirement plan implemented in 1998.  The
$415,000  increase in 1997 was related to (1) normal annual raises; (2) the Bank
adding  additional  personnel  in  the latter part of 1996 to support the higher
level  of activity; and (3) the Finance Company's operations which accounted for
52% of the increase in 1997 due to the opening of additional branches during the
year.

     Occupancy  and  furniture,  fixtures,  and  equipment  expenses  increased
$149,000  or  17%  to $1.0 million in 1998 from $890,000 in 1997 and $805,000 in
1996.  The  increase  in  1998  was related primarily to higher depreciation and
associated  expenses  at  the  Bank  related  to  technology  implementations,
furnishing  and  equipment  additions,  and  other  expenses  for the new branch
facility  which  opened  in  October  1998.  The  increase from 1996 to 1997 was
primarily  related  to  the Finance Company adding 2 new branches in early 1997,
combined  with technology hardware and software upgrades implemented at the Bank
during  1997.

     Included  in  the  line  item  "other  operating expenses", which increased
$86,000  or  6% between 1997 and 1998 and $249,000 or 19% between 1996 and 1997,
are  charges  for  insurance  claims  and premiums; printing and office support;
credit  card  expenses; professional services; advertising and public relations;
and  other  branch  and  customer  related  expenses.  These  items  are related
directly  to  the  normal operations of the Bank and increase in relation to the
increase  in  assets,  the  higher  level  of transaction volume, and the larger
number  of  customer  accounts.  The  Bank's  activity  accounted  for a $45,000
increase  in 1998 and $140,000 increase in 1997, primarily related to the higher
level  of  activity  and  number  of  accounts as compared to the prior year and
technology-related  consultant  expenses  in  1997.  The  remainder  of  the
consolidated increase, or $40,000 in 1998 and $109,000 in 1997, was generated by
the  activity  of  the parent company and Finance Company, including charges for
annual  reports  and  shareholder  relations,  and credit reports, license fees,
acquisition  premium  amortization,  and  office  support  for  Freedom.

INCOME  TAXES
     The  Company  recorded  an income tax provision of $1.0 million,  $895,000,
and  $644,000 for 1998, 1997, and 1996, respectively.  The effective tax rate in
each  year  was 35%, 36%, and 39%, respectively.  The decrease in effective rate
each  year  is  primarily  related  to  the  higher  level of tax-free municipal
investments.

CAPITAL  RESOURCES

     Total  shareholders'  equity  amounted  to  $15.7 million, or 9.2% of total
assets,  at  December  31,  1998.  This is compared to $13.4 million, or 8.3% of
total  assets,  at  December  31,  1997.  The  $2.3  million  increase  in total
shareholders'  equity  resulted  principally  from  retention of earnings, stock
issued  pursuant  to the Company's incentive stock option plan, and the increase
in  unrealized  gain  on  investments  available  for  sale.

     Book  value  per  share  at December 31, 1998 and 1997 was $5.16 and $4.43,
respectively.  The  Company  has issued seven 5% stock distributions in the form
of  stock  dividends  to  shareholders  between June 1993 and December 1998.  In
August  1998, the Company issued a two-for-one stock split which resulted in the
issuance  of  1,444,299  shares  of  common stock.  The stated par value of each
share  was  not  changed  from  $1.


<TABLE>
<CAPTION>

                                 CAPITAL SUMMARY
                                The Company          The Bank
                            ------------------   --------------------
                             As of      As of      As of      As of
                           12/31/98   12/31/97   12/31/98   12/31/97
                           ---------  ---------  ---------  ---------
<S>                        <C>        <C>        <C>        <C>
Total risk-based capital      12.16%     11.68%     11.12%     10.68%
Tier 1 risk-based capital     10.91%     10.43%      9.94%      9.46%
Leverage capital               9.08%      8.87%      8.25%      8.02%

</TABLE>


     The table presented above sets forth various capital ratios for the Company
and  the  Bank  at  December  31,  1998  and 1997.  The Company and the Bank are
subject  to  various regulatory capital requirements administered by the federal
banking  agencies.  At December 31, 1998 and 1997, the Company and the Bank were
in  compliance with each of the applicable regulatory capital requirements.  The
Bank exceeded the "well-capitalized" standard under the regulatory framework for
prompt  corrective  action.

     To  date,  the  capital  needs  of  the  Company  have been met through the
retention  of  earnings  and from the proceeds of its initial offering of common
stock.  The  Company  believes that the rate of asset growth will not negatively
impact  the capital base.  The Company has no commitments or immediate plans for
any  significant  capital expenditures outside of the normal course of business.
The  Company's  management  does not know of any trends, events or uncertainties
that  may  result  in  the  Company's capital resources materially increasing or
decreasing.

LIQUIDITY

     Liquidity  management  involves  meeting  the cash flow requirements of the
Company.  The  Company  must maintain an adequate liquidity position in order to
respond  to  the  short-term demand for funds caused by withdrawals from deposit
accounts, maturities of repurchase agreements, extensions of credit, and for the
payment  of  operating  expenses.  Maintaining an adequate level of liquidity is
accomplished  through  a combination of liquid assets, those which can easily be
converted  into  cash, and access to additional sources of funds.  The Company's
primary liquid assets are cash and due from banks, federal funds sold, unpledged
investment  securities  available  for  sale,  other  short-term investments and
maturing  loans.  These  primary  liquidity sources accounted for 19% and 17% of
average  assets  for  each  of  the  years  ended  December  31,  1998 and 1997,
respectively.  In management's opinion, the Company maintains adequate levels of
liquidity  by  retaining sufficient liquid assets and assets which can be easily
converted  into cash and by maintaining access to various sources of funds.  The
primary  sources  of  funds available through the Bank include advances from the
Federal  Home  Loan  Bank,  purchasing  federal  funds  from  other    financial
institutions,  lines  of credit through the Federal Reserve Bank, and increasing
deposits  by  raising  rates  paid.

     Summit  Financial  Corporation  ("Summit  Financial"),  the  parent holding
company,  has  limited  liquidity needs.  Summit Financial requires liquidity to
pay  limited  operating expenses, to service its debt, and to provide funding to
its  consumer  finance  subsidiary,  Freedom Finance.  Summit Financial has $1.5
million  in  available  liquidity remaining from its initial public offering and
the  retention  of  earnings.  All of this liquidity was advanced to the Finance
Company  to  fund  its  operations as of December 31, 1998.  In addition, Summit
Financial  has  an  available  line  of  credit  totaling  $2.5  million with an
unaffiliated  financial  institution, all of which was available at December 31,
1998.  At  December  31,  1998,  Summit Financial also had a term loan agreement
totaling  $320,000  with  a  Director  of  the  Company to provide liquidity for
funding the operating needs of Freedom.  Further sources of liquidity for Summit
Financial  include  additional borrowings from individuals, and  management fees
and  debt  service  which  are  paid  by  its  subsidiary  on  a  monthly basis.

     Liquidity  needs  of  Freedom  Finance,  primarily  for the funding of loan
originations,  acquisitions,  and  operating  expenses,  have  been  met to date
through  the  initial  capital  investment of $500,000 made by Summit Financial,
borrowings  from  an  unrelated  private investor, and line of credit facilities
provided  by  Summit  Financial  and  Summit  National  Bank,  a sister company.

     The  Company's  management  believes  its liquidity sources are adequate to
meet  its  operating  needs  and  does  not  know  of  any  trends,  events  or
uncertainties  that  may result in a significant adverse affect on the Company's
liquidity  position.

EFFECT  OF  INFLATION  AND  CHANGING  PRICES

     The consolidated financial statements have been prepared in accordance with
generally  accepted  accounting  principles  which  require  the  measurement of
financial  position  and  results  of operations in terms of historical dollars,
without  consideration of changes in the relative purchasing power over time due
to  inflation.  Unlike  most  other  industries, virtually all of the assets and
liabilities  of  a  financial  institution are monetary in nature.  As a result,
interest  rates  generally  have  a  more  significant  effect  in  a  financial
institution's  performance  than  does  the  effect  of  inflation.

     The  yield  on  a  majority  of  the  Company's  earning  assets  adjusts
simultaneously  with  changes  in  the  general  level  of  interest  rates.
Approximately  45%  of  the  Company's liabilities at December 31, 1998 had been
issued with fixed terms and can be repriced only at maturity.  During periods of
falling  interest  rates,  as  experienced  in  late  1998, the Company's assets
reprice  faster  than the supporting liabilities.  This causes a decrease in the
net  interest  margin  until  the fixed rate deposits mature and are repriced at
then  lower current market rates, thus narrowing the difference between what the
Company  earns  on  its  assets  and what it pays on its liabilities.  Given the
Company's  current  balance  sheet  structure,  the opposite effect (that is, an
increase  in  net  interest  income)  is  realized in a rising rate environment.

ACCOUNTING,  REPORTING  AND  REGULATORY  MATTERS

     In  June  1998,  the  Financial  Accounting Standards Board ("FASB") issued
Statement  of  Financial  Accounting  Standards  ("SFAS")  133,  "Accounting for
Derivative  Instruments  and Hedging Activities."  SFAS 133 changes the previous
accounting definition of a derivative and discusses the appropriateness of hedge
accounting  for  various  forms of hedging activities.  Under this standard, all
derivatives  are  measured  at  fair  value  and  recognized in the statement of
financial position as assets or liabilities.  This standard is effective for all
fiscal  quarters  and  years beginning after June 15, 1999.  Because the Company
has  no  derivative  activity at this time, management does not expect that this
standard  will  have  a  significant  effect  on  the  Company.

YEAR  2000

     The  Company  recognizes  that  there  is  a  business risk in computerized
systems  as  the  calendar  rolls  into the next century.  The Federal Financial
Institutions  Examination  Council  ("FFIEC") issued an interagency statement on
May  5,  1997,  providing  an outline for institutions to effectively manage the
Year  2000  ("Y2K")  challenges.  The  Company  has  developed  an  ongoing plan
designed  to  ensure  that  its  operational  and  financial systems will not be
adversely  affected  by  Y2K  software failures due to processing errors arising
from  calculations  using  dates  after  December  31, 1999.  The Company has an
internal  task  force  assigned  to  this project and the Board of Directors and
management  of  the Company have established Year 2000 compliance as a strategic
initiative.

     The  Company has completed the assessment phase of the project in which all
critical  applications  are  identified  and  programming issues determined.  In
conjunction  with  this  phase,  the  Company  inventoried  all of its hardware,
software,  and  environmental or other non-computerized systems.  Each inventory
item  (equipment,  application, or service provider system) has been prioritized
and  evaluated  as  to its Y2K compliance.  Currently, all systems identified as
"mission critical" have been certified as Y2K compliant by the vendors providing
the  software applications or hardware.  The Company has substantially completed
its  testing  phase  for both the mission critical applications as well as other
inventoried  items.  The  Company  has  established  timelines  for  testing all
noncritical  software  and  ancillary  systems,  such  as  telephone systems and
security devices.  Finally, the Company is in the process of completing both its
remediation  and  business  resumption  contingency plans.  In these contingency
plans,  all  possible  scenarios  have  attempted to be addressed, including the
resources and procedures necessary to manually process transactions in the event
the core systems do not function on January 1, 2000.  While the Company believes
that  it  has available resources to assure Y2K compliance, it is to some extent
dependent on vendor cooperation.  Accordingly, management is in constant contact
with  its  various  vendors  and  is monitoring their Y2K efforts on an on-going
basis.

     In  addition to the internal processing risks associated with the Year 2000
issue,  the  Company has made every attempt to address external risks, primarily
credit  and  liquidity,  associated with our major customers and their Year 2000
remediation  efforts.  The way that these material customers approach and comply
with  Y2K  readiness  will have a potentially significant impact on the Company.
In  an  effort  to  identify  and manage the risks posed by those customers, the
Company  has  (1)  identified  material customers; (2) evaluated their Year 2000
preparedness through questionnaires and interviews; (3) assessed their Year 2000
risk  to  the  Company;  and  (4) implemented appropriate controls to manage and
mitigate  their Year 2000 related risk to the Company.  The controls implemented
may  include  ongoing monitoring of a customer's Y2K remediation efforts, review
and  adjustment  of  credit  maturities,  obtaining  additional  collateral,  or
including  specific  Year  2000  language  in  loan  agreements, as appropriate.
Management  is  also  addressing all new relationships for Y2K risk.  Currently,
there  are  no  significant customers which are rated as a "high" Year 2000 risk
and  which  the Company believes a risk of loss is present.  Other components of
the  Company's  Year  2000 Customer Awareness Program include questionnaires for
major  customers,  hosting  seminars  for  customers, distributing the Company's
"Year  2000 Position Statement" which contains the initiatives and status of the
Company's Y2K efforts, and informative mailers and brochures describing the Year
2000  challenges  in  general  as  well  as  specific information related to the
Company.

     At  this  time,  the  Company  believes the cost of making modifications to
correct  any  Y2K  issues  will be nominal.  Corrections and "fixes" to software
provided  by  third-party vendors is covered in the annual maintenance fees paid
by  the  Company  on  a  regular  basis.  In  addition,  equipment  and software
acquisition  expenses  are  not  expected  to  materially differ from historical
levels  as the Company routinely upgrades and purchases technologically advanced
software  and hardware on a continual basis and expects to specifically evaluate
and  test  such  purchases  for  Y2K  compliance.  There has been no significant
change  to  the Company's existing technology plans due to any Year 2000 issues.

     The Company's management believes it has adequately addressed the Year 2000
issue  and  has  adequate resources and personnel executing the Year 2000 Action
Plan  to  ensure compliance in accordance with the timeframes established in the
plan  and  as  mandated by the regulatory agencies which oversee the Company and
its subsidiaries.  The Company's bank subsidiary has already been subject to and
will  undergo  additional  examinations  of  its Year 2000 initiatives to ensure
compliance  with  all  regulatory requirements.  Management does not know of any
trends,  events,  or  uncertainities  related  to  the  Year 2000 issues that it
believes  may  result in a significant adverse effect on the Company's financial
position.

INTEREST  RATE  SENSITIVITY

     Achieving  consistent  growth in net interest income is the primary goal of
the Company's asset/liability function.  The Company's profitability is affected
by  fluctuations in interest rates.  The Company attempts to control the mix and
maturities  of  assets  and liabilities to maintain a reasonable balance between
exposure  to  interest  rate fluctuations and earnings and to achieve consistent
growth  in net interest income.  The Company seeks to accomplish this goal while
maintaining  adequate  liquidity and capital.  A sudden and substantial increase
in interest rates may adversely impact the Company's earnings to the extent that
the  interest  rates on interest-earning assets and interest-bearing liabilities
do  not  change at the same speed, to the same extent or on the same basis.  The
Company's  asset/liability  mix  is  sufficiently balanced so that the effect of
interest rates moving in either direction is not expected to be significant over
time.

     The  Company's  Asset/Liability Committee ("ALCO") uses a simulation model,
among other techniques, to assist in achieving consistent growth in net interest
income  while managing interest rate risk.  The model takes into account, over a
12 month period or longer if necessary, interest rate changes as well as changes
in  the  mix  and  volume  of  assets  and liabilities.  The model simulates the
Company's  balance  sheet  and  income  statement  under  several different rate
scenarios  and  rate  shocks.  The  model's  inputs  (such as interest rates and
levels  of  loans  and deposits) are updated as necessary throughout the year in
order  to  maintain  a current forecast as assumptions change.  According to the
model,  the  Company  is  presently  positioned so that net interest income will
increase  slightly  if  interest  rates  rise in the near term and will decrease
slightly  if  interest  rates  decline  in  the  near  term.

     The Company also uses interest rate sensitivity gap analysis to monitor the
relationship  between  the maturity and repricing of its interest-earning assets
and    interest-bearing    liabilities.    Interest  rate  sensitivity  gap  is 
defined as the difference between the amount of interest-earning assets maturing
or  repricing  within  a specific time period and the amount of interest-bearing
liabilities  maturing  or  repricing  within  the  same time period.  The static
interest  sensitivity  gap  position,  while  not a complete measure of interest
sensitivity, is also reviewed periodically to provide insights related to static
repricing  structure  of  assets  and  liabilities.  At  December 31, 1998, on a
cumulative  basis  through  12  months,  rate-sensitive  liabilities      exceed
rate-sensitive  assets,  resulting  in  a  12  month  period liability sensitive
position  at  the end of 1998 of $23.3 million.  When the effective change ratio
(the  historical  relative  movement  of  each  asset's and liability's rates in
relation  to  a  100  basis  point  change  in the prime rate) is applied to the
interest  gap  position,  the Company is actually in an asset sensitive position
over  a  12  month  period  and  the  entire  repricing  lives of the assets and
liabilities.  This  is  primarily due to the fact that 63% of the loan portfolio
moves  immediately  on a one-to-one ratio with a change in the prime rate, while
the  deposit  accounts  do  not increase or decrease as much relative to a prime
rate  movement.

     The  Company's  asset  sensitive  position means that assets reprice faster
than  the  liabilities, resulting in increases in the net interest income during
periods  of  rising rates and decreases in net interest income when market rates
decline.  In  1997,  the  prime rate increased as did the Company's net interest
margin  as  compared  to  1996.  In  the  fourth quarter of 1998, interest rates
dropped, leading to declines in the average yield on assets for 1998 as compared
to  1997.  However,  the  Company  was  able to maintain the net interest margin
relatively  constant  with  the  1997 margin due to the reduction in the overall
cost  of  funds  based  primarily  on (1) the higher percentage of floating rate
deposits in 1998 as compared to 1997 which allowed the Company to respond to the
prime  rate  drops;  and  (2)  the  maturities  of higher priced certificates of
deposit  throughout  1998  which  were  replaced with CDs at lower current rates
during  the  year.


ITEM  7A.     QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

     Market  risk  is the risk of loss from adverse changes in market prices and
rates.  The  Company's  market  risk  arises principally from interest rate risk
inherent  in its lending, deposit and borrowing activities.  Management actively
monitors  and  manages  its  interest  rate risk exposure.  Although the Company
manages  other  risks,  as  in  credit quality and liquidity risk, in the normal
course  of  business,  management  considers  interest  rate risk to be its most
significant  market  risk  and  it  could  potentially have the largest material
effect  on  the  Company's financial condition and results of operations.  Other
types of market risks, such as foreign currency exchange rate risk and commodity
price  risk,  do  not  arise  in  the  normal  course  of the Company's business
activities.

     The  Bank's  ALCO  monitors  and considers methods of managing the rate and
sensitivity repricing characteristics of the balance sheet components consistent
with maintaining acceptable levels of changes in net portfolio value ("NPV") and
net  interest  income.  Net  portfolio  value  represents  the  market  value of
portfolio  equity  and  is  equal to the market value of assets minus the market
value  of  liabilities, with adjustments made for off-balance sheet items over a
range  of  assumed  changes  in market interest rates.  A primary purpose of the
Company's  asset  and  liability  management  is to manage interest rate risk to
effectively  invest  the  Company's capital and to preserve the value created by
its  core business operations.  As such, certain management monitoring processes
are  designed to minimize the impact of sudden and sustained changes in interest
rates  on  NPV  and  net  interest  income.

     The  Company's  exposure  to  interest  rate risk is reviewed on a periodic
basis  by  the  Board  of  Directors  and  the  ALCO  which  is charged with the
responsibility  to maintain the level of sensitivity of the Bank's net portfolio
value  within  Board  approved  limits.  Interest rate risk exposure is measured
using  interest  rate sensitivity analysis by computing estimated changes in NPV
of  its  cash flows from assets, liabilities, and off-balance sheet items in the
event  of  a  range  of assumed changes in market interest rates.  This analysis
assesses the risk of loss in market risk sensitive instruments in the event of a
sudden  and  sustained 100 - 400 basis points increase or decrease in the market
interest  rates.  The Company's Board of Directors has adopted an interest rate 
risk policy which establishes maximum allowable decreases in NPV in the event of
a  sudden  and  sustained  increase  or  decrease  in  market  interest  rates.

     Computation  of  prospective  effects of hypothetical interest rate changes
included in these forward-looking statements (within the meaning of  Section 27A
of the Securities Act of l933) are subject to certain risks, uncertainities, and
assumptions including relative levels of market interest rates, loan prepayments
and  deposit  decay rates, and should not be relied upon as indicative of actual
results.  Should  one  or  more  of these risks or uncertainties materialize, or
should   underlying   assumptions  prove  incorrect,  actual  results  may  vary
materially  from  those expected or projected.  These forward-looking statements
speak  only  as  of  the date of the document.  Further, the computations do not
contemplate  any  actions  the Company could undertake in response to changes in
interest  rates.  The  Company expressly disclaims any obligation or undertaking
to  publicly  release  any updates or revisions to any forward-looking statement
contained herein to reflect any change in the Company's expectations with regard
to any change in events, conditions or circumstances on which any such statement
is  based.

     The  following table presents the Company's projected change in NPV for the
various rate shock levels as of year end.  This table indicates that at December
31,  1998,  in  the  event  of a sudden and sustained increase in the prevailing
market interest rates, the Company's NPV would be expected to decrease, and that
in the event of a sudden and sustained decrease in rate, the Company's NPV would
be  expected to increase.  At December 31, 1998, the Company's estimated changes
in  NPV  were  within  the  limits  established  by  the  Board.

<TABLE>
<CAPTION>


                                     Market
                                    Value of
                                    Portfolio
                          Policy     Equity     Percent
Change in Interest Rates   Limit     (000s)      Change
------------------------  -------  -----------  --------
<S>                       <C>      <C>          <C>
400 basis point rise       60.00%  $     8,640    45.00%
300 basis point rise       40.00%  $    11,567    26.00%
200 basis point rise       25.00%  $    12,893    18.00%
100 basis point rise       10.00%  $    14,417     8.00%
No change                   0.00%  $    15,674     0.00%
100 basis point decline    10.00%  $    16,632     6.00%
200 basis point decline    25.00%  $    17,638    13.00%
300 basis point decline    40.00%  $    18,685    19.00%
400 basis point decline    60.00%  $    20,920    33.00%
</TABLE>



<PAGE>

ITEM  8.     FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA

<TABLE>
<CAPTION>


                   SUMMIT FINANCIAL CORPORATION AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEETS
                               (Dollars in Thousands)

                                                                   December 31,
                                                                 1998       1997
                                                               ---------  ---------
<S>                                                            <C>        <C>
ASSETS
Cash and due from banks                                        $  5,377   $  5,737 
Interest-bearing bank balances                                      623        704 
Federal funds sold                                                  400      2,920 
Investment securities available for sale                         27,102     28,213 
Loans, net of unearned income and net of allowance for loan
  losses of $1,827 and $1,728                                   128,842    117,027 
Premises and equipment, net                                       3,101      2,360 
Accrued interest receivable                                       1,132      1,168 
Other assets                                                      3,908      1,442 
                                                               ---------  ---------
                                                               $170,485   $160,279 
                                                               =========  =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
 Noninterest-bearing demand                                    $ 20,877   $ 17,679 
 Interest-bearing demand                                          8,541      6,249 
 Savings and money market                                        50,047     37,355 
 Time deposits, $100,000 and over                                17,801     29,495 
 Other time deposits                                             42,977     50,150 
                                                               ---------  ---------
                                                                140,243    140,928 
Federal funds purchased and repurchase agreements                 3,566        803 
Other short-term borrowings                                         820      1,000 
FHLB advances                                                     8,000      2,000 
Accrued interest payable                                          1,052      1,370 
Other liabilities                                                 1,130        809 
                                                               ---------  ---------
     Total liabilities                                          154,811    146,910 
                                                               ---------  ---------
Shareholders' equity:
 Common stock, $1.00 par value; 20,000,000 shares authorized;
 3,038,706 and 2,876,448 shares issued and outstanding            3,039      2,876 
 Additional paid-in capital                                      12,726     10,908 
 Retained earnings                                                    -          - 
 Accumulated other comprehensive income, net of tax                 313         90 
 Nonvested restricted stock                                        (404)      (505)
                                                               ---------  ---------
     Total shareholders' equity                                  15,674     13,369 
Commitments and contingencies
                                                               --------   -------- 
                                                               $170,485   $160,279 
                                                               =========  =========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                  SUMMIT FINANCIAL CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                  (Dollars in Thousands, except Per Share Data)

                                                   For the Years Ended December 31,
                                                       1998      1997      1996
                                                     --------  --------  --------
<S>                                                  <C>       <C>       <C>
Interest Income:
 Interest on loans                                   $12,275   $11,491   $ 8,924 
 Interest on taxable securities                        1,155     1,173     1,241 
 Interest on nontaxable securities                       413       135        29 
 Interest on federal funds sold                          397       410       207 
 Other interest income                                   176       172       146 
                                                     --------  --------  --------
                                                      14,416    13,381    10,547 
                                                     --------  --------  --------
Interest Expense:
 Interest on deposits                                  6,431     6,140     4,753 
 Interest expense on other borrowings                    371       264       211 
                                                     --------  --------  --------
                                                       6,802     6,404     4,964 
                                                     --------  --------  --------
Net interest income                                    7,614     6,977     5,583 
Provision for loan losses                               (290)     (392)     (516)
                                                     --------  --------  --------
Net interest income after provision for loan losses    7,324     6,585     5,067 
                                                     --------  --------  --------
Other Income:
 Service charges and fees on deposit accounts            203       194       174 
 Credit card fees and income                             298       248       217 
 Insurance commissions                                   287       193       182 
 Other income                                            620       400       407 
                                                     --------  --------  --------
                                                       1,408     1,035       980 
                                                     --------  --------  --------
Other Expenses:
 Salaries, wages and benefits                          3,167     2,726     2,311 
 Occupancy                                               494       442       395 
 Furniture, fixtures and equipment                       545       448       410 
 Other operating expenses                              1,620     1,534     1,285 
                                                     --------  --------  --------
                                                       5,826     5,150     4,401 
                                                     --------  --------  --------
Income before income taxes                             2,906     2,470     1,646 
Provision for income taxes                            (1,011)     (895)     (644)
                                                     --------  --------  --------
Net income                                           $ 1,895   $ 1,575   $ 1,002 
                                                     ========  ========  ========

Net income per common share:
  Basic                                              $  0.63   $  0.53   $  0.34 
  Diluted                                            $  0.53   $  0.48   $  0.31 
Average shares outstanding (in thousands):
  Basic                                                3,031     2,967     2,938 
  Diluted                                              3,583     3,279     3,169 
<FN>
           See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                       SUMMIT FINANCIAL CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                                   FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
                                                   (Dollars in Thousands)


                                                                                Accumulated
                                                     Additional                    other        Nonvested        Total
                                            Common     paid-in     Retained    comprehensive   restricted    shareholders'
                                             Stock     capital     earnings     income, net       stock         equity
                                            -------  -----------  ----------  ---------------  -----------  ---------------
<S>                                         <C>      <C>          <C>         <C>              <C>          <C>
Balance at December 31, 1995                $ 2,536  $     8,074          -   $           54            -   $       10,664 
Net income for the year ended
 December 31, 1996                                -            -      1,002                -            -            1,002 
Other comprehensive income:
Unrealized net loss on investments
 available for sale, net of taxes of ($36)        -            -          -              (54)           -              (54)
                                                                                                            ---------------
Comprehensive income                              -            -          -                -            -              948 
                                                                                                            ---------------
Employee stock options exercised                  8           20          -                -            -               28 
Issuance of 5% stock distribution               126          825       (951)               -            -                - 
Cash in lieu of fractional shares from
 stock distribution                               -            -         (3)               -            -               (3)
                                            -------  -----------  ----------  ---------------  -----------  ---------------
Balance at December 31, 1996                  2,670        8,919         48                -            -           11,637 
Net income for the year ended
 December 31, 1997                                -            -      1,575                -            -            1,575 
Other comprehensive income:
Unrealized net gain on investments
 available for sale, net of taxes of $47          -            -          -               90            -               90 
                                                                                                            ---------------
Comprehensive income                              -            -          -                -            -            1,665 
                                                                                                            ---------------
Employee stock options exercised                 22           50          -                -            -               72 
Issuance of common stock pursuant
 to restricted stock plan                        48          457          -                -         (505)               - 
Issuance of 5% stock distribution               136        1,482     (1,618)               -            -                - 
Cash in lieu of fractional shares from
 stock distribution                               -            -         (5)               -            -               (5)
                                            -------  -----------  ----------  ---------------  -----------  ---------------
Balance at December 31, 1997                  2,876       10,908          -               90         (505)          13,369 
Net income for the year ended
 December 31, 1998                                -            -      1,895                -            -            1,895 
Other comprehensive income:
Unrealized net gain on investments
 available for sale, net of taxes of $146         -            -          -              223            -              223 
                                                                                                            ---------------     
Comprehensive income                              -            -          -                -            -            2,118 
                                                                                                            ---------------
Employee stock options exercised                 18           70          -                -            -               88 
Amortization of deferred compensation
 on restricted stock                              -            -          -                -          101              101 
Issuance of 5% stock distribution               145        1,748     (1,893)               -            -                - 
Cash in lieu of fractional shares from
 stock distribution                               -            -         (2)               -            -               (2)
                                            -------  -----------  ----------  ---------------  -----------  ---------------
 Balance at December 31, 1998               $ 3,039  $    12,726  $       -   $          313        ($404)  $       15,674 
                                            =======  ===========  ==========  ===============  ===========  ===============
<FN>

See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>


<TABLE>
<CAPTION>

                                       SUMMIT FINANCIAL CORPORATION
                                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                          (Dollars in Thousands)

                                                                           For the Years Ended December 31,
                                                                             1998       1997       1996
                                                                           ---------  ---------  ---------
<S>                                                                        <C>        <C>        <C>
Cash flows from operating activities:
Net income                                                                 $  1,895   $  1,575   $  1,002 
Adjustments to reconcile net income to net cash
provided by operating activities:
  Provision for loan losses                                                     290        392        516 
  Depreciation and amortization                                                 403        487        424 
  Loss (gain) on sale and disposal of equipment                                  34        (23)         - 
  Net amortization of net premium on investment securities                       55         26         23 
  Amortization of deferred compensation on restricted stock                     101          -          - 
  Decrease (increase) in accrued interest receivable                             36       (228)      (160)
  Decrease (increase) in other assets                                           190       (276)      (450)
  (Decrease) increase in accrued interest payable                              (318)       547        104 
  Increase (decrease) in other liabilities                                      175        176       (187)
  Deferred income taxes                                                        (140)        23       (131)
                                                                           ---------  ---------  ---------
     Net cash provided by operating activities                                2,721      2,699      1,141 
                                                                           ---------  ---------  ---------
Cash flows from investing activities:
  Purchases of securities available for sale                                (11,406)   (18,953)    (8,693)
  Proceeds from sales of securities available for sale                          951      3,271        750 
  Proceeds from maturities of securities available for sale                  11,882      6,091      9,405 
  Purchases of investments in FHLB and other stock                              (84)       (74)      (122)
  Purchase of company-owned life insurance                                   (1,725)         -          - 
  Net increase in loans                                                     (12,106)   (15,715)   (25,922)
  Purchases of finance loans receivable                                           -       (499)    (1,154)
  Purchases of premises and equipment                                        (1,178)      (208)       (85)
  Proceeds from sale of premises and equipment                                    -         41          - 
                                                                           ---------  ---------  ---------
     Net cash used by investing activities                                  (13,666)   (26,046)   (25,821)
                                                                           ---------  ---------  ---------
Cash flows from financing activities:
  Net (decrease) increase in deposit accounts                                  (685)    23,123     18,486 
  Net increase (decrease) in federal funds sold and repurchase agreements     2,763         42       (800)
  Net (repayments) proceeds from other short-term borrowings                   (180)       450        550 
  Proceeds from FHLB advances                                                 8,500      2,000      2,000 
  Repayments of FHLB advances                                                (2,500)    (2,000)    (2,000)
  Proceeds from employee stock options exercised                                 88         72         28 
  Cash paid in lieu of fractional shares                                         (2)        (5)        (3)
                                                                           ---------  ---------  ---------
     Net cash provided by financing activities                                7,984     23,682     18,261 
                                                                           ---------  ---------  ---------
Net (decrease) increase in cash and cash equivalents                         (2,961)       335     (6,419)
Cash and cash equivalents, beginning of period                                9,361      9,026     15,445 
                                                                           ---------  ---------  ---------
Cash and cash equivalents, end of period                                   $  6,400   $  9,361   $  9,026 
                                                                           =========  =========  =========
<FN>

See  accompanying  notes  to  consolidated  financial  statements.
</TABLE>



<PAGE>
                  SUMMIT FINANCIAL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996


NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

PRINCIPLES  OF CONSOLIDATION  -  Summit Financial Corporation (the "Company"), a
South  Carolina  corporation,  is the parent holding company for Summit National
Bank  (the  "Bank"), a nationally chartered bank, and Freedom Finance, Inc. (the
"Finance  Company"), a consumer finance company.  In 1997, the Bank incorporated
Summit  Investment  Services,  Inc.  as  a  wholly-owned  subsidiary  to provide
financial  management  services  and nondeposit product sales.  The accompanying
consolidated  financial  statements  include the accounts of the Company and its
subsidiaries.  All  significant intercompany accounts and transactions have been
eliminated  in  consolidation.

USE  OF  ESTIMATES  -  The  consolidated  financial  statements  are prepared in
conformity with generally accepted accounting principles ("GAAP") which requires
management  to  make estimates and assumptions.  These estimates and assumptions
affect  the  reported  amounts  of  assets and liabilities and the disclosure of
contingent  assets  and liabilities at the date of the financial statements.  In
addition,  they  affect  the  reported  amounts of income and expense during the
reporting  period.  Actual  results  could  differ  from  these  estimates  and
assumptions.

INVESTMENT  SECURITIES  -  At  the  time  of purchase, investment securities are
classified by management into three categories as follows:  (1) Investments Held
to Maturity: securities which the enterprise has the positive intent and ability
to  hold  to  maturity,  which  are  reported  at  amortized  cost;  (2) Trading
Securities:  securities  that are bought and held principally for the purpose of
selling  them  in  the  near  future,  which  are  reported  at  fair value with
unrealized  gains and losses included in earnings; and (3) Investments Available
for  Sale:  securities  that  may  be  sold  under certain conditions, which are
reported  at fair value, with unrealized gains and losses excluded from earnings
and  reported  as  a  separate  component of shareholders' equity, net of income
taxes.  The  amortization  of  premiums and accretion of discounts on investment
securities  are  recorded as adjustments to interest income.  Gains or losses on
sales  of  investment  securities are based on the net proceeds and the adjusted
carrying  amount  of  the  securities  sold,  using  the specific identification
method.  Unrealized  losses  on  securities,  reflecting  a  decline in value or
impairment  judged  by  the  Company  to be other than temporary, are charged to
income  in  the  consolidated  statements  of  income.

LOANS  AND  INTEREST  INCOME  -  Loans  of  the  Bank  are  carried at principal
amounts,  net  of unearned income, reduced by an allowance for loan losses.  The
Bank  recognizes interest income daily based on the principal amount outstanding
using  the  simple  interest  method.  The  accrual  of  interest  is  generally
discontinued  on loans of the Bank which become 90 days past due as to principal
or interest or when management believes, after considering economic and business
conditions  and  collection  efforts, that the borrower's financial condition is
such  that collection of interest is doubtful.  Management may elect to continue
accrual  of  interest  when  the estimated net realizable value of collateral is
sufficient  to cover the principal balances and accrued interest and the loan is
in  the  process  of collection.  Amounts received on nonaccrual loans generally
are  applied  against principal prior to the recognition of any interest income.
Generally,  loans  are restored to accrual status when the obligation is brought
current, has performed in accordance with the contractual terms for a reasonable
period  of  time  and  the  ultimate  collectibility  of  the  total contractual
principal  and  interest  is  no  longer  in  doubt.

     Loans  of  the Finance Company are carried at the gross amount outstanding,
reduced  by  unearned interest, insurance income and other deferred fees, and an
allowance  for loan losses.  Unearned interest and fees are deferred at the time
the  loans  are  made  and  accreted  to  income  on  a collection method, which
approximates  the level yield method.  Charges for late payments are credited to
income  when  collected.  Loans of the Finance Company are generally charged-off
when  they  become 150 days past due or when it is determined that collection is
doubtful.


<PAGE>

NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  CONTINUED

IMPAIRMENT  OF  LOANS  -  Loans  are  considered  to  be  impaired  when,  in
management's  judgment,  the collection of all amounts of principal and interest
is not probable in accordance with the terms of the loan agreement.  The Company
accounts for impaired loans in accordance with Statement of Financial Accounting
Standards  ("SFAS")  114, "Accounting by Creditors for Impairment of a Loan", as
amended  by  SFAS  118  in  the  areas of disclosure requirements and methods of
recognizing  income.  SFAS  114  requires  that impaired loans be valued at fair
value,  which  is determined based upon the present value of expected cash flows
discounted  at the loan's effective interest rate, the market price of the loan,
if  available,  or the value of the underlying collateral.  All cash receipts on
impaired  loans  are  applied  to  principal until such time as the principal is
brought  current.  After  principal has been satisfied, future cash receipts are
applied  to  interest income, to the extent that any interest has been foregone.
As  a  practical  matter, the Bank determines which loans are impaired through a
loan  review  process.

ALLOWANCE  FOR  LOAN  LOSSES  -  The  allowance  for  loan losses is established
through a provision for loan losses charged to operations and reflects an amount
that,  in  management's  opinion,  is  adequate to absorb inherent losses in the
existing  portfolio.  Additions  to  the  allowance  are  based  on management's
evaluation  of  the  loan portfolio under current economic conditions, past loan
loss  experience,  and  such  other  factors  which,  in management's judgement,
deserve  recognition  in  estimating  loan  losses.

     Loans  are  charged-off when, in the opinion of management, they are deemed
to  be  uncollectible.  Recognized  losses are charged against the allowance and
subsequent  recoveries are added to the allowance.  Management believes that the
allowance  is adequate.  While management uses the best information available to
make  evaluations,  future  adjustments  to  the  allowance  may be necessary if
economic conditions differ substantially from the assumptions used in making the
evaluations.  The allowance for loan losses is subject to periodic evaluation by
various  regulatory  authorities  and  may  be subject to adjustments based upon
information  that  is  available  to  them  at  the  time  of their examination.

LOAN  FEES  -  Loan  origination  fees and direct costs of loan originations are
deferred  and  recognized as an adjustment of yield by the interest method based
on  the  contractual  terms  of the loan.  Loan commitment fees are deferred and
recognized  as  an  adjustment  of yield over the related loan's life, or if the
commitment  expires  unexercised,  recognized  in  income  upon  expiration.

PREMISES  AND  EQUIPMENT  -  Premises,  equipment and leasehold improvements are
stated  at cost less accumulated depreciation and amortization.  Depreciation is
recorded  using  the  straight-line method over the estimated useful life of the
related  assets as follows: building, 40 years; furniture and fixtures, 7 years;
equipment  and  computer  hardware  and  software, 3 to 7 years; and vehicles, 3
years.  Amortization  of  leasehold  improvements  is  recorded  using  the
straight-line  method  over the lesser of the estimated useful life of the asset
or  the  term  of the respective lease.  Additions to premises and equipment and
major  replacements  or betterments are added at cost.  Maintenance, repairs and
minor  replacements  are  charged to operating expense as incurred.  When assets
are  retired or otherwise disposed of, the cost and accumulated depreciation are
removed  from  the  accounts  and  any  gain  or  loss  is  reflected in income.

INTANGIBLE  ASSETS  -  Intangible  assets  consist  primarily  of  goodwill  and
customer  lists resulting from the Finance Company's branch acquisitions.  On an
ongoing  basis,  the  Company  evaluates  the carrying value of these intangible
assets  and  determines  whether  these  assets have been impaired based upon an
undiscounted  cash  flow  approach.  Amortization  of intangibles is provided by
using  the straight-line method over the estimated economic lives of the assets,
which  is  generally from 5 - 7 years.  Intangible assets are included in "Other
assets"  on  the  accompanying  consolidated balance sheets and have unamortized
balances  of  $654,000 and $811,000 at December 31, 1998 and 1997, respectively,
with related amortization of $157,000, $154,000 and $106,000 for the years ended
December  31,  1998,  1997,  and  1996,  respectively.

STOCK-BASED  COMPENSATION  -  The Company reports stock-based compensation using
the  intrinsic  value  method  prescribed in Accounting Principles Board Opinion
("APB")  25,  "Accounting  for  Stock  Issued  to  Employees",  which  measures
compensation  expense  as  the excess, if any, of the quoted market price of the
Company's stock at the date of the grant over the amount an employee must pay to
acquire  the  stock.  SFAS  123,  "Accounting  for  Stock-Based  Compensation",
encourages  but  does  not  require  companies  to  record compensation cost for
stock-based  compensation  plans  at  fair  value.  The  Company  follows  the
disclosure-only  provisions  of  SFAS  123.



<PAGE>
NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  -  CONTINUED

PER  SHARE  DATA  -  Earnings  per share ("EPS") are computed in accordance with
SFAS 128, "Earnings per Share."  SFAS 128 requires companies to report basic and
diluted  EPS.  Basic EPS includes no dilution and is computed by dividing income
available to common shareholders by the weighted-average number of common shares
outstanding  for  the  period.  Diluted  EPS  reflects the potential dilution of
securities  that  could  share  in  the  earnings  of the Company.  Common stock
equivalents  included  in  the  diluted EPS computation consist of stock options
which  are computed using the treasury stock method.  Weighted average share and
per  share  data have been restated to reflect the August 1998 two-for-one stock
split  and  all  5%  stock  distributions.

INCOME  TAXES  -  Income  taxes  are  accounted for in accordance with SFAS 109,
"Accounting  for  Income  Taxes".  Under  the asset and liability method of SFAS
109,  deferred  tax  assets  and  liabilities  are recognized for the future tax
consequences  attributable  to  differences  between  the  financial  statement
carrying  amounts  of  existing  assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using the enacted rates
expected  to  apply  to  taxable  income  in  the years in which those temporary
differences are expected to be recovered or settled.  Under SFAS 109, the effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.  Valuation allowances are
established to reduce deferred tax assets if it is determined to be "more likely
than  not" that all or some portion of the potential deferred tax asset will not
be  realized.

RECLASSIFICATIONS  -  Certain  amounts  in  the  1997  and  1996  consolidated
financial  statements  have  been  reclassified  to  conform  with  the  1998
presentations.  These reclassifications had no impact on shareholders' equity or
net  income  as  previously  reported.

NOTE  2  -  STATEMENT  OF  CASH  FLOWS
     For  the  purpose of reporting cash flows, cash includes currency and coin,
cash  items  in  process of collection and due from banks.  Included in cash and
cash  equivalents are federal funds sold and overnight investments.  The Company
considers  the  amounts  included in the balance sheet line items, "Cash and due
from  banks",  "Interest-bearing  bank  balances" and "Federal funds sold" to be
cash  and cash equivalents.  These accounts totaled $6,400,000 and $9,361,000 at
December  31,  1998  and  1997,  respectively.

The  following  summarizes  supplemental  cash  flow  data  for  the years ended
December  31:

<TABLE>
<CAPTION>

(dollars in thousands)                  1998    1997    1996
-------------------------------------  ------  ------  -------
<S>                                    <C>     <C>     <C>
Interest paid                          $7,120  $5,857  $4,860 
Income taxes paid                         870   1,065     801 
Change in market value of investment
 securities, net of income taxes          223      90     (54)
</TABLE>


NOTE  3  -  INVESTMENT  SECURITIES
     The  aggregate  amortized  cost, fair value, and gross unrealized gains and
losses  of  investment  securities  available  for  sale  at December 31 were as
follows:
<TABLE>
<CAPTION>

(dollars in thousands)                          1998                                               1997
                          -------------------------------------------------   ---------------------------------------------
                          Amortized   Unrealized    Unrealized                Amortized   Unrealized    Unrealized    Fair
                             Cost        Gains        Losses     Fair Value      Cost        Gains        Losses      Value
                          ----------  -----------  ------------  -----------  ----------  -----------  ------------  -------
<S>                       <C>         <C>          <C>           <C>          <C>         <C>          <C>           <C>
U.S. treasury             $    1,250  $         3  $         -   $     1,253  $    2,749  $         2  $        (1)  $ 2,750
U.S. government agencies       9,819          123           (3)        9,939      11,048           57           (1)   11,104
Mortgage-backed                5,404           31          (14)        5,421       7,238           29          (16)    7,251
States and municipal          10,124          370           (5)       10,489       7,042          108          (42)    7,108
                          ----------  -----------  ------------  -----------  ----------  -----------  ------------  -------
                          $   26,597  $       527         ($22)  $    27,102  $   28,077  $       196         ($60)  $28,213
                          ==========  ===========  ============  ===========  ==========  ===========  ============  =======
</TABLE>


<PAGE>

NOTE  3  -  INVESTMENT  SECURITIES  -  CONTINUED
          The  amortized  cost and estimated fair value of investment securities
at December 31, 1998, by contractual maturity, are shown in the following table.
Expected maturities may differ from contractual maturities because borrowers may
have  the  right  to  call  or  prepay  obligations  with  or without prepayment
penalties.  Fair  value of securities was determined using quoted market prices.
<TABLE>
<CAPTION>



                                          Amortized    Fair
(dollars in thousands)                       Cost      Value
----------------------------------------  ----------  -------
<S>                                       <C>         <C>
Due in one year or less                   $    2,563  $ 2,569
Due after one year, through five years         6,255    6,336
Due after five years, through ten years        5,992    6,125
Due after ten years                           11,787   12,072
                                          ----------  -------
                                          $   26,597  $27,102
                                          ==========  =======
</TABLE>



          The change in the unrealized gain on securities available for sale, as
recorded  in  shareholders'  equity,  for  the  year ended December 31, 1998 was
$223,000.  Investment  securities  with  an approximate book value of $8,589,000
and  $10,387,000  at  December  31, 1998 and 1997, respectively, were pledged to
secure  public  deposits,  securities  sold under repurchase agreements, and for
other  purposes  as  required  or  permitted by law.  Estimated market values of
securities  pledged  were  $8,734,000  and  $10,435,000 at December 31, 1998 and
1997,  respectively.  Gross  realized  gains  on  sales  of  securities from the
Company's  available  for  sale  portfolio  was  less  than  $1,000 in each year
presented.  There  were  no  gross realized losses on sales of securities in any
year  presented.

NOTE  4  -  INVESTMENTS  REQUIRED  BY  LAW
          Summit  National Bank, as a member of the Federal Reserve Bank ("FRB")
and  the  Federal Home Loan Bank of Atlanta ("FHLB"), is required to own capital
stock  in these organizations.  The Bank's equity investments required by law is
included in the accompanying consolidated balance sheets in "Other assets".  The
amount  of  stock owned is based on the Bank's capital levels in the case of the
FRB  and  totaled  $255,000  at  December 31, 1998 and 1997.  The amount of FHLB
stock  owned is determined based on the Bank's balances of residential mortgages
and  advances  from  the  FHLB and totaled $479,000 and $395,000 at December 31,
1998  and  1997, respectively.  No ready market exists for these stocks and they
have  no  quoted  market  value.  However,  redemption  of  these  stocks  has
historically been at par value.  Accordingly, the carrying amounts are deemed to
be  a  reasonable  estimate  of  fair  value.

NOTE  5  -  LOANS  AND  ALLOWANCE  FOR  LOAN  LOSSES
          A  summary  of  loans  by classification at December 31 is as follows:
<TABLE>
<CAPTION>

(dollars in thousands)                       1998       1997
-----------------------------------------  ---------  ---------
<S>                                        <C>        <C>
Commercial                                 $ 24,100   $ 25,313 
Real estate - commercial                     48,527     41,172 
Real estate - residential                    42,832     37,683 
Construction                                  6,463      3,685 
Installment and other consumer loans          5,656      7,819 
Consumer finance, net of unearned income      2,881      2,792 
Other loans and overdrafts                      210        291 
                                           ---------  ---------
                                            130,669    118,755 
Less - allowance for loan losses             (1,827)    (1,728)
                                           ---------  ---------
                                           $128,842   $117,027 
                                           =========  =========
</TABLE>



          Unearned  income  on  consumer  finance  loans  totaled  $808,000  and
$732,000  at  December  31, 1998 and 1997, respectively.  There were no loans on
nonaccrual  at either December 31, 1998 or 1997.  Loans past due in excess of 90
days  amounted  to  approximately  $483,000 and $82,000 at December 31, 1998 and
1997,  respectively.  There  were no foreclosed loans or other real estate owned
in  any  year presented.  There were no impaired loans at or for the years ended
December  31,  1998  or  1997.

<PAGE>
NOTE  5  -  LOANS  AND  ALLOWANCE  FOR  LOAN  LOSSES  -  CONTINUED
          The  Company  makes  loans  to  individuals  and  small-  to mid-sized
businesses for various personal and commercial purposes primarily in the Upstate
of  South  Carolina.  The  Company  has  a  diversified  loan  portfolio and the
Company's  loan  portfolio  is not dependent upon any specific economic segment.
As  of December 31, 1998 the Company had no significant concentrations of credit
risk  in  its  loan  portfolio  other  than most loans being located in the same
geographic  region.

          Changes  in the allowance for loan losses for the years ended December
31  were  as  follows:
<TABLE>
<CAPTION>

(dollars in thousands)                            1998     1997     1996
-----------------------------------------------  -------  -------  -------
<S>                                              <C>      <C>      <C>
Balance, beginning of year                       $1,728   $1,487   $1,068 
    Provision for losses                            290      392      516 
    Loans charged-off                              (408)    (428)    (387)
    Recoveries of loans previously charged-off      217      251      233 
    Allocation for purchased loans                    -       26       57 
                                                 -------  -------  -------
Balance, end of year                             $1,827   $1,728   $1,487 
                                                 =======  =======  =======
</TABLE>

     Directors, executive officers, and associates of such persons are customers
of  and  have  transactions  with  the Company's bank subsidiary in the ordinary
course  of  business.  Included  in  such transactions are outstanding loans and
commitments,  all  of  which are made under substantially the same credit terms,
including  interest  rates  and  collateral, as those prevailing at the time for
comparable  transactions with unrelated persons and do not involve more than the
normal risk of collectibility.  The aggregate dollar amount of these outstanding
loans was approximately $8,504,000 and $6,935,000 at December 31, 1998 and 1997,
respectively.  During  1998,  new  loans  and  advances  on  lines  of credit of
approximately  $5,100,000  were  made,  and  payments  on  these loans and lines
totaled  approximately $3,531,000.  At December 31, 1998, there were commitments
to  extend  additional  credit to related parties in the amount of approximately
$3,670,000.

NOTE  6  -  PREMISES,  EQUIPMENT  AND  LEASES
     A  summary  of  premises  and  equipment  at  December  31  is  as follows:
<TABLE>
<CAPTION>

(dollars in thousands)              1998      1997
--------------------------------  --------  --------
<S>                               <C>       <C>
Land                              $   483   $   483 
Building                            1,252     1,252 
Leasehold improvements                825       436 
Computer, office equipment          1,372     1,017 
Furniture and fixtures                612       477 
Vehicles                               91        94 
                                  --------  --------
                                    4,635     3,759 
Less - accumulated depreciation    (1,534)   (1,399)
                                  --------  --------
                                  $ 3,101   $ 2,360 
                                  ========  ========
</TABLE>

     The  Company  leases  branch  facilities  for both the Bank and the Finance
Company.  These  leases  have initial terms of from two to ten years and various
renewal  options  under  substantially  the  same  terms  with  certain  rate
escalations.   Rent expense included in the accompanying consolidated statements
of  income  under  the  caption  "Occupancy"  totaled  $226,000,  $204,000,  and
$180,000,  respectively,  for the years ended December 31, 1998, 1997, and 1996.
Minimum  rental  commitments  under  these noncancellable leases at December 31,
1998,  exclusive  of  renewal  options,  are  as follows: (dollars in thousands)
<TABLE>
<CAPTION>

<S>                       <C>
1999                      $  266
2000                         251
2001                         230
2002                         213
2003                         216
2004 and beyond              245
                          ------
Total minimum obligation  $1,421
                          ======
</TABLE>



<PAGE>

NOTE  7  -  DEPOSITS
Time  deposits  by  maturity  at  December  31  consist  of  the  following:

<TABLE>
<CAPTION>

(dollars in thousands)              1998     1997
---------------------------------  -------  -------
<S>                                <C>      <C>
Maturing within 1 year             $54,325  $65,394
Maturing after 1, within 3 years     5,818   13,490
Maturing after 3, within 5 years       529      761
Maturing beyond 5 years                106        -
                                  --------  -------
                                   $60,778  $79,645
                                   =======  =======
</TABLE>



NOTE  8  -  BORROWED  FUNDS
     Short-term  borrowings and their related weighted average interest rates at
December  31  were:
<TABLE>
<CAPTION>

                                    1998           1997
                              --------------  --------------
(dollars in thousands)        Amount   Rate   Amount   Rate
                              -------  -----  -------  -----
<S>                           <C>      <C>    <C>      <C>
Federal funds purchased       $ 2,720  5.40%  $     -     - 
Repurchase agreements             846  4.85%      803  5.42%
Other short-term borrowings       820  6.91%    1,000  7.38%
                              -------  -----  -------  -----
                              $ 4,386  5.58%  $ 1,803  6.51%
                              =======  =====  =======  =====
</TABLE>

     The  average  interest rate on short-term borrowings during 1998, 1997, and
1996  was  6.07%,  6.21%,  and  5.72%,  respectively.

     Federal funds purchased represent unsecured overnight borrowings from other
financial institutions by Summit National Bank.  Repurchase agreements represent
short-term borrowings by the Bank with overnight maturities which rollover under
a  continuing  contract.  Repurchase agreements are collateralized by securities
of  U.S.  government  agencies  or  by  obligations  of  state  and    political
subdivisions.  All  pledged  collateral  is  held  by  a third-party safekeeper.
Pledged  securities  for  repurchase  agreements at December 31, 1998 had a book
value  of  $1,073,000  and  a  market  value  of  $1,099,000.  Other  short-term
borrowings  consist  of term loan agreements with individuals which have initial
maturities  of  less  than  one  year.  These  term loans are unsecured and bear
interest  at fixed rates from 6.00% - 7.25%.  One term loan totaling $320,000 at
December  31,  1998  and  1997 is payable to a director of the Company and bears
interest  at  6.00%  and  7.25%  at  December  31,  1998 and 1997, respectively.

     For  the  outstanding  repurchase agreements, the following is a summary of
the  average  and  maximum  amount  at any month end for each of the years ended
December  31:
<TABLE>
<CAPTION>

(dollars in thousands)     1998   1997    1996
-------------------------  -----  -----  ------
<S>                        <C>    <C>    <C>
Average outstanding        $ 823  $ 789  $1,277
Maximum at any month-end   $ 846  $ 803  $1,745
</TABLE>

     The  components  of  other  interest  expense  for  each of the years ended
December  31  presented in the accompanying consolidated statements of income is
as  follows:
<TABLE>
<CAPTION>

(dollars in thousands)        1998   1997   1996
----------------------------  -----  -----  -----
<S>                           <C>    <C>    <C>
Federal funds purchased and
 repurchase agreements        $  43  $  42  $  73
Other short-term borrowings      71     52     25
FHLB advances                   257    170    113
                              -----  -----  -----
                              $ 371  $ 264  $ 211
                              =====  =====  =====
</TABLE>



<PAGE>
NOTE  9  -  FHLB  ADVANCES
     FHLB  advances  represent  borrowings  from the FHLB of Atlanta by the Bank
pursuant to lines of credit collateralized by a blanket lien on qualifying loans
secured  by  first  mortgages  on  1-4  family  residences.  These advances have
various  maturity  dates with interest payable monthly on maturities of one year
or less and interest payable quarterly on maturities over one year.  Total loans
of  the  Bank  pledged  to  the  FHLB  for  advances  at  December 31, 1998 were
approximately  $29.1  million.

     At  December  31,  1998, FHLB advances were at fixed interest rates ranging
from  5.40%  to  5.77%  with initial maturities from one to ten years.  Advances
totaling  $4  million have one-time call features at the option of the FHLB with
call dates ranging from April 2000 to June 2003.  Maturities of FHLB advances at
December  31  were  as  follows:

<TABLE>
<CAPTION>

(dollars in thousands)         1998               1997
                        ------------------  ------------------
                                 WEIGHTED            WEIGHTED
FISCAL YEAR MATURITIES  AMOUNT     RATE     AMOUNT     RATE
                        -------  ---------  -------  ---------
<S>                     <C>      <C>        <C>      <C>
1998                    $     -         -   $ 2,000      6.31%
1999                      3,000      5.33%        -         - 
2000                      1,000      5.77%        -         - 
2003                      3,000      5.48%        -         - 
2004 and beyond           1,000      5.51%        -         - 
                        -------  ---------  -------  ---------
                        $ 8,000      5.63%  $ 2,000      6.31%
                        =======  =========  =======  =========
</TABLE>


NOTE  10  -  UNUSED  LINES  OF  CREDIT
     At  December 31, 1998, the Bank had available credit of $4,000,000 with the
FHLB.  Borrowings  under  this  arrangement  can  be made with various terms and
repayment  schedules  and  with  fixed  or variable rates of interest.  Advances
under  this  line  would  be  secured by the existing blanket lien on qualifying
loans  secured  by  first  mortgages  on  1-4  family  residences.

     At  December  31, 1998, the Bank had short-term lines of credit to purchase
federal  funds from unrelated banks with available balances totaling $7,300,000,
of  which $6,300,000 is on an unsecured basis and the remaining $1,000,000 would
require  security in the form of U.S. Treasury or government agency obligations.
The  interest  rate  on any borrowings under these lines would be the prevailing
market  rate  for  federal  funds  purchased.  These  lines  are available to be
outstanding  up  to  ten  consecutive days for general corporate purposes of the
Bank and have specified repayment deadlines after disbursement of funds.  All of
the  lenders  have  reserved  the right to withdraw these lines at their option.

     The Company has a line of credit arrangement with a commercial bank for the
purpose of funding the loans receivable of the Finance Company.  The line, which
is  for  a total of $2.5 million, is secured by the common stock of the Bank and
bears  interest  at  the  prime  lending  rate  less  50 basis points.  The line
requires  quarterly  interest  payments and  matures in October 1999.  Under the
terms  of the line, the Company is required to meet certain covenants, including
minimum capital levels and other performance ratios.  The Company believes it is
in  compliance  with  these  covenants.  There was no outstanding balance on the
line  at  December  31,  1998  or  1997.


NOTE  11  -  INCOME  TAXES
     Income  tax  expense  for  the  years  ended  December  31  is  as follows:
<TABLE>
<CAPTION>

(dollars in thousands)               1998    1997    1996
----------------------------------  -------  -----  ------
<S>                                 <C>      <C>    <C>
Current tax provision:
  Federal                           $1,061   $ 798  $ 727 
  State                                 90      74     48 
                                    -------  -----  ------
                                     1,151     872    775 
                                    -------  -----  ------
Deferred tax (benefit) provision:
  Federal                             (140)     23   (131)
  State                                  -       -      - 
                                    -------  -----  ------
                                      (140)     23   (131)
                                    -------  -----  ------
Total tax provision                 $1,011   $ 895  $ 644 
                                    =======  =====  ======
</TABLE>



<PAGE>
NOTE  11  -  INCOME  TAXES  -  CONTINUED
     Income  taxes  are  different  than  tax  expense  computed by applying the
statutory  federal  tax  rate of 34% to income before income taxes.  The reasons
for  the  differences  for  years  ended  December  31  are  as  follows:
<TABLE>
<CAPTION>

(dollars in thousands)               1998     1997    1996
----------------------------------  -------  ------  ------
<S>                                 <C>      <C>     <C>
Tax expense at statutory rate       $  988   $ 840   $ 560 
State tax, net of federal benefit       59      49      29 
Change in valuation allowance for
 deferred tax assets                   (10)     (3)      - 
Effect of tax exempt interest          (75)    (37)    (10)
Other, net                              49      46      65 
                                    -------  ------  ------
Total                               $1,011   $ 895   $ 644 
                                    =======  ======  ======
</TABLE>


     The  sources  and  tax  effects  of temporary differences that give rise to
significant  portions of the deferred tax assets and deferred tax liabilities at
December  31  were  as  follows:
<TABLE>
<CAPTION>

(dollars in thousands)                                   1998    1997
------------------------------------------------------  ------  ------
<S>                                                     <C>     <C>
DEFERRED TAX ASSETS:
Allowance for loan losses deferred for tax purposes     $ 586   $ 559 
Book depreciation in excess of tax depreciation            26      12 
Other                                                      79      30 
                                                        ------  ------
          Gross deferred tax assets                       691     601 
          Less: valuation allowance                       (15)    (25)
                                                        ------  ------
          Net deferred tax assets                         676     576 
                                                        ------  ------
DEFERRED TAX LIABILITIES:
Net deferred loan costs                                   (22)    (35)
Unrealized net gains on securities available for sale    (192)    (46)
Compensation expense deferred for financial reporting    (109)   (136)
                                                        ------  ------
          Gross deferred tax liabilities                 (323)   (217)
                                                        ------  ------
NET DEFERRED TAX ASSET                                  $ 353   $ 359 
                                                        ======  ======
</TABLE>


     The  net  deferred  tax  asset  is  included  in  "Other  assets"  in  the
accompanying  consolidated  balance  sheets.  A portion of the change in the net
deferred  tax  asset  relates  to  unrealized  gains  and  losses  on securities
available  for sale.  A current period deferred tax expense of $146,000 has been
recorded directly to shareholders' equity.  The balance of the change in the net
deferred  tax  asset  results  from  the  current period deferred tax benefit of
($140,000).  The  valuation  allowance  for deferred income taxes relates to the
state loss carryforwards which may not be ultimately realized to reduce taxes of
the  Company.  The  decreases  in  the valuation allowance for each of the years
ended  December  31,  1998 and 1997 were based on actual earnings of the Company
for  those  years.

NOTE  12  -  OTHER  INCOME  AND  OTHER  EXPENSES
     The  components  of  other operating income for the years ended December 31
are  as  follows:
<TABLE>
<CAPTION>

(dollars in thousands)                1998   1997   1996
------------------------------------  -----  -----  -----
<S>                                   <C>    <C>    <C>
Late charges and other loan fees      $ 215  $ 180  $ 152
Mortgage origination fees               120     55     52
Nondeposit product sales commission     177    104    178
Other                                   108     61     25
                                      -----  -----  -----
                                      $ 620  $ 400  $ 407
                                      =====  =====  =====
</TABLE>



<PAGE>
NOTE  12  -  OTHER  INCOME  AND  OTHER  EXPENSES  -  CONTINUED
     The  components of other operating expenses for the years ended December 31
are  as  follows:
<TABLE>
<CAPTION>

(dollars in thousands)                     1998    1997    1996
----------------------------------------  ------  ------  ------
<S>                                       <C>     <C>     <C>
Advertising and public relations          $  200  $  256  $  171
Stationary, printing and office support      324     317     262
Credit card service expense                  231     194     171
Deposit and branch expenses                  126     111     143
Legal and professional fees                  239     203     160
Amortization of intangibles                  157     154     106
Other                                        343     299     272
                                          ------  ------  ------
                                          $1,620  $1,534  $1,285
                                          ======  ======  ======
</TABLE>



NOTE  13  -  CAPITAL  STOCK  AND  PER  SHARE  INFORMATION
     On  August  24,  1998,  the  Company  issued  a  two-for-one stock split to
shareholders  of  record  on  August  10,  1998.  A total of 1,444,299 shares of
common  stock  were  issued in connection with the two-for-one stock split.  The
stated  par  value of each share was not changed from $1.  On December 28, 1998,
the Company issued a 5% stock distribution in the form of a stock dividend.  The
distribution  was  issued to all shareholders of record on December 14, 1998 and
resulted  in the issuance of 144,550 shares of common stock of the Company.  All
average  share  and per share data have been restated to reflect the stock split
and  the  stock  distribution  as  of  the  earliest  period  presented.

     The  following  is  a  reconciliation  of the denominators of the basic and
diluted per share computations for net income.  There was no required adjustment
to  the numerator from the net income reported on the accompanying statements of
income.
<TABLE>
<CAPTION>

                                       1998                    1997                    1996
                                ---------------------  ----------------------  ---------------------
                                 Basic      Diluted      Basic      Diluted      Basic      Diluted
<S>                            <C>         <C>         <C>         <C>         <C>         <C>
Net income                     $1,895,000  $1,895,000  $1,575,000  $1,575,000  $1,002,000  $1,002,000
                               ----------  ----------  ----------  ----------  ----------  ----------
Average shares outstanding      3,030,890   3,030,890   2,966,893   2,966,893   2,938,435   2,938,435
Dilutive common stock options           -     552,010           -     312,112           -     229,708
                               ----------  ----------  ----------  ----------  ----------  ----------
                                3,030,890   3,582,900   2,966,893   3,279,005   2,938,435   3,168,143
                               ----------  ----------  ----------  ----------  ----------  ----------
Per share amount               $     0.63  $     0.53  $     0.53  $     0.48  $     0.34  $     0.31
                               ==========  ==========  ==========  ==========  ==========  ==========
</TABLE>



NOTE  14  -  REGULATORY  CAPITAL  REQUIREMENTS
     The  Company  and  the  Bank  are  subject  to  various  regulatory capital
requirements  administered  by  the  federal  banking agencies.  Failure to meet
minimum  capital  requirements  can  initiate  certain  mandatory  and  possibly
additional discretionary actions by regulators that, if undertaken, could have a
material  effect on the financial statements.  Under capital adequacy guidelines
and  the  regulatory framework for prompt corrective action, the Company and the
Bank must meet specific capital guidelines that involve quantitative measures of
the  Company's  and the Bank's assets, liabilities and certain off-balance sheet
items  as  calculated  under regulatory accounting practices.  The Company's and
the  Bank's  capital  amounts and classification are also subject to qualitative
judgments  by  the  regulators  about  components,  risk  weightings,  and other
factors.

     The  Company  and  the  Bank  are  required to maintain minimum amounts and
ratios  of total risk-based capital, Tier I capital, and Tier I leverage capital
as  set  forth  in the table following.  Management believes, as of December 31,
1998,  that  the  Company and the Bank meet all capital adequacy requirements to
which  they are subject.  At December 31, 1998 and 1997, the Bank is categorized
as  "well  capitalized"  under  the  regulatory  framework for prompt corrective
action.  There  are  no  current  conditions  or events that management believes
would  change  the  Company's  or  the  Bank's  category.


<PAGE>
NOTE  14  -  REGULATORY  CAPITAL  REQUIREMENTS  -  CONTINUED
     The  following  table  presents the Company's and the Bank's actual capital
amounts  and  ratios  at  December  31,  1998  and  1997  as well as the minimum
calculated  amounts  for  each  regulatory  defined  category.
<TABLE>
<CAPTION>

(dollars  in  thousands)                                   For Capital    To Be Categorized
                                           Actual      Adequacy Purposes "Well Capitalized"
                                        ---------------  ---------------  ---------------
                                        Amount   Ratio   Amount   Ratio   Amount   Ratio
                                        -------  ------  -------  ------  -------  ------
<S>                                     <C>      <C>     <C>      <C>     <C>      <C>
AS OF DECEMBER 31, 1998
The Company
--------------------------------------                                                   
Total capital to risk-weighted assets   $16,846  12.16%  $11,083   8.00%        N.A.
Tier 1 capital to risk-weighted assets  $15,114  10.91%  $ 5,541   4.00%        N.A.
Tier 1 capital to average assets        $15,114   9.08%  $ 6,657   4.00%        N.A.
The Bank
--------------------------------------                                                   
Total capital to risk-weighted assets   $15,126  11.12%  $10,878   8.00%  $13,597  10.00%
Tier 1 capital to risk-weighted assets  $13,520   9.94%  $ 5,438   4.00%  $ 8,158   6.00%
Tier 1 capital to average assets        $13,520   8.25%  $ 6,556   4.00%  $ 8,196   5.00%

AS OF DECEMBER 31, 1997
The Company
--------------------------------------                                                   
Total capital to risk-weighted assets   $14,871  11.68%  $10,187   8.00%        N.A.
Tier 1 capital to risk-weighted assets  $13,279  10.43%  $ 5,093   4.00%        N.A.
Tier 1 capital to average assets        $13,279   8.87%  $ 5,986   4.00%        N.A.
The Bank
--------------------------------------                                                   
Total capital to risk-weighted assets   $13,307  10.68%  $ 9,971   8.00%  $12,464  10.00%
Tier 1 capital to risk-weighted assets  $11,792   9.46%  $ 4,985   4.00%  $ 7,478   6.00%
Tier 1 capital to average assets        $11,792   8.02%  $ 5,885   4.00%  $ 7,356   5.00%
</TABLE>



NOTE  15  -  STOCK  COMPENSATION  PLANS
     The  Company  has  a  Restricted  Stock  Plan  for  awards  to  certain key
employees.  Under  the Restricted Stock Plan, the Company may grant common stock
to  its  employees  for  up  to  255,255  shares.  All  shares granted under the
Restricted  Stock  Plan  are subject to restrictions as to continuous employment
for  a  specified  time period following the date of grant.  During this period,
the holder is entitled to full voting rights and dividends.  The restrictions as
to  transferability  of  shares  granted under this plan vest over a period of 5
years  at  a rate of 20% on each anniversary date of the grant.  At December 31,
1998, there were 52,920 shares (adjusted for the two-for-one stock split and all
stock  distributions)  of  restricted  stock outstanding.  Deferred compensation
representing  the  difference  between the fair market value of the stock at the
date  of grant and the cash paid for the stock is amortized over a 5 year period
as the restrictions lapse.  Included in the accompanying consolidated statements
of  income  under  the  caption  "Salaries,  wages  and benefits" is $101,000 of
amortized  deferred  compensation  for  the  year  ended  December  31,  1998.

     The  Company  has  an  Incentive Stock Option Plan and a Non-Employee Stock
Option  Plan  (collectively referred to as stock-based option plans).  Under the
Incentive  Stock Option Plan, options are periodically granted to employees at a
price  not  less  than the fair market value of the shares at the date of grant.
Options granted are exercisable for a period of ten years from the date of grant
and  become  exercisable  at  a  rate  of  20%  each  year  on  the  first  five
anniversaries  of  the  date  of  grant.  The  stock  option plan authorizes the
granting  of  stock  options  up to a maximum of 726,007 shares of common stock,
adjusted  for  the  two-for-one  stock  split  and  all  stock  distributions.

     Under  the  Non-Employee Stock Option Plan, options have been granted, at a
price not less than the fair market value of the shares at the date of grant, to
eligible  directors  as  a  retainer  for  their services as directors.  Options
granted  are  exercisable  for  a  period  of  ten years from the date of grant.
Options granted on January 1, 1995 became exercisable one year after the date of
grant.  Options  granted  on January 1, 1996 become exercisable over a period of
nine  years  at  a  rate of 11.1% on each of the first nine anniversaries of the
date  of  grant.  As of January 1, 1996, all 319,070 stock options (adjusted for
the  stock split and distributions) authorized to be granted under this plan had
been  granted.


<PAGE>
NOTE  15  -  STOCK  COMPENSATION  PLANS  -  CONTINUED
     The  Company  follows  APB  25 to account for its stock-based option plans.
Accordingly, no compensation cost has been recognized for the stock-based option
plans.  Had compensation cost for the Company's incentive and non-employee stock
option  plans  been  determined  based  on  the fair value at the grant date for
awards  in  1998, 1997, and 1996 consistent with the provisions of SFAS 123, the
Company's net earnings and diluted earnings per share would have been reduced to
the  proforma  amounts  as  follows:
<TABLE>
<CAPTION>



(dollars, except per share, in thousands)   1998    1997    1996
-----------------------------------------  ------  ------  ------
<S>                                        <C>     <C>     <C>
Net earnings - as reported                 $1,895  $1,575  $1,002
Net earnings - proforma                    $1,705  $1,436  $  991
Diluted earnings per share - as reported   $ 0.53  $ 0.48  $ 0.31
Diluted earnings per share - proforma      $ 0.48  $ 0.44  $ 0.31
</TABLE>



     The fair value of each option grant is estimated on the date of grant using
the  Black-Scholes  option-pricing model with the following assumptions used for
grants:  expected  volatility of 49.1%, 26.5%, and 6.4% for 1998, 1997 and 1996,
respectively; risk-free interest rate of 4.54%, 5.70%, and 6.21% for 1998, 1997,
and  1996, respectively; and expected lives of the options of 7.5 years for 1998
and  6  years  for  1997  and  1996.  There  were no cash dividends in any year.

     The  following  is  a  summary of the activity under the stock-based option
plans  for  the  years  ended  December  31,  1998, 1997 and 1996 is as follows:

<TABLE>
<CAPTION>

                                1998                  1997                 1996
                         --------------------  -------------------  ------------------
                                    Weighted             Weighted             Weighted
                                     Average              Average              Average
                                    Exercise             Exercise             Exercise
                           Shares     Price     Shares     Price     Shares     Price
                          --------  ---------  --------  ---------  --------  ---------
<S>                       <C>       <C>        <C>       <C>        <C>       <C>
Outstanding, January 1    911,843   $    5.38  892,935   $    5.20  447,594   $    3.86
Granted                    48,381   $   14.81   57,550   $    7.17  475,383   $    6.42
Canceled                  (15,358)  $    8.55  (12,803)  $    6.54  (21,777)  $    4.70
Exercised                 (18,173)  $    4.93  (25,839)  $    2.81   (8,265)  $    3.30
                          --------  ---------  --------  ---------  --------  ---------
Outstanding, December 31  926,693   $    5.83  911,843   $    5.38  892,935   $    5.20
                          ========  =========  ========  =========  ========  =========
Exercisable, December 31  474,126   $    4.57  409,098   $    4.30  293,714   $    3.40
                          ========  =========  ========  =========  ========  =========
</TABLE>


     The  following table summarizes information about stock options outstanding
under  the  stock-based  option  plans  at  December  31,  1998:

<TABLE>
<CAPTION>


                                    OPTIONS OUTSTANDING            OPTIONS EXERCISABLE
                            -----------------------------------    --------------------
                                          Weighted-
                                           Average    Weighted-                Weighted-
                              Number      Remaining    Average      Number      Average
                              Options    Contractual   Exercise     Options     Exercise
Range of Exercise Prices:   Outstanding     Life        Price     Exercisable    Price
                            -----------  -----------  ----------  -----------  ----------
<S>                         <C>          <C>          <C>         <C>          <C>
$2.49  -  $3.20                170,321    2.1 years  $     2.76      170,321  $     2.76
$3.82  -  $4.60                177,793    5.8 years  $     4.56      147,902  $     4.56
$6.17                          302,236    6.9 years  $     6.17       72,565  $     6.17
$6.69 - $7.71                  226,888    8.0 years  $     6.87       81,574  $     6.83
$9.18 - $14.52                  13,545    9.1 years  $    10.97        1,764  $     9.18
$15.24                          35,910    9.3 years  $    15.24            -           -
                            -----------  ----------- -----------  ----------- -----------
$2.49  - $15.24                926,693    6.2 years  $     5.83      474,126  $     4.57
                            ===========  ===========  ==========  ===========  ==========

</TABLE>

<PAGE>

NOTE  16  -  EMPLOYEE  BENEFIT  PLANS
     The  Company  maintains an employee benefit plan for all eligible employees
of  the  Company  and  its subsidiaries under the provisions of Internal Revenue
Code  Section  401K.  The Summit Retirement Savings Plan (the "Plan") allows for
employee  contributions and, upon annual approval of the Board of Directors, the
Company  matches  employee  contributions  from  one percent to a maximum of six
percent  of  deferred compensation.  The matching contributions were 6%, 4%, and
2%  of  deferred compensation for 1998, 1997 and 1996, respectively.  A total of
$106,000,  $61,000,  and  $29,000,  respectively,  in  1998,  1997, and 1996 was
charged  to  operations  for the Company's matching contribution.  Employees are
immediately vested in their contributions to the Plan and become fully vested in
the  employer  matching  contribution  after  five  years  of  service.

     During  1998,  Summit  National  Bank  entered  into  salary  continuation
agreements  with  several  key  management  employees, all of whom are officers.
Under the agreements, the Bank is obligated to provide for each such employee or
his  beneficiaries,  during  a  period  of  20 years after the employee's death,
disability,  or  retirement,  annual  benefits ranging from $38,000 to $113,000.
The  estimated present value of future benefits to be paid is being accrued over
the  period  from  the  effective  date  of  the  agreements  until the expected
retirement  dates  of the participants.  The expense incurred and amount accrued
for  this  nonqualified salary continuation plan, which is an unfunded plan, for
the  year  ended  December  31,  1998 amounted to $49,000.  To partially finance
benefits  under  this  plan,  the  Bank purchased and is the beneficiary of life
insurance  policies.  Proceeds  from  the  insurance policies are payable to the
Company  upon  the  death of the participant.  The cash surrender value of these
policies  included  in  the  accompanying  consolidated balance sheets in "Other
assets"  was  $1,754,000  at  December  31,  1998.

NOTE  17  -  CASH,  DIVIDEND  AND  LOAN  RESTRICTIONS AND CONTINGENT LIABILITIES
     In  the  normal  course of business, the Company and its subsidiaries enter
into  agreements,  or are subject to regulatory requirements, that may result in
cash,  debt  and dividend restrictions.  A summary of the most restrictive items
follows.

     The  Company's  banking  subsidiary is required to maintain average reserve
balances with the Federal Reserve Bank based upon a percentage of deposits.  The
amount  of  the  required  reserve  balance  at  December  31, 1998 and 1997 was
$543,000  and  $465,000,  respectively.

     The  ability  of  the  Company  to  pay  cash  dividends  is dependent upon
receiving  cash  in the form of dividends from the Bank.  The dividends that may
be  paid  by  the  Bank  to  the  Company  are  subject to legal limitations and
regulatory  capital  requirements.  The  approval  of  the  Comptroller  of  the
Currency  is  required if the total of all dividends declared by a national bank
in  any  calendar  year  exceeds  the  Bank's  net  profits  (as  defined by the
Comptroller) for that year combined with its retained net profits (as defined by
the Comptroller) for the two preceding calendar years.  As of December 31, 1998,
no  cash  dividends  have  been  declared  or  paid by the Bank and the Bank had
available  retained  earnings  of  $5.2  million.

     Under  Federal Reserve Board regulations, the Bank is limited in the amount
it  may  loan  to  the Company, the Finance Company, or other affiliates.  Loans
made  by  the  Bank  to  a single affiliate may not exceed 10%, and loans to all
affiliates  may  not  exceed  20%  of  the Bank's capital, surplus and undivided
profits,  after  adding  back  the  allowance  for  loan losses.  Based on these
limitations,  approximately  $3.1  million  was  available for loans to each the
Company  and  the  Finance  Company  at  December  31, 1998.  Certain collateral
restrictions  also  apply  to  loans  from  the  Bank  to  its  affiliates.

     In  the  normal  course  of  business, the Company and its subsidiaries are
periodically  involved  in  litigation.  In  the  opinion  of  the  Company's
management, none of this litigation should have a material adverse effect on the
accompanying  consolidated  financial  statements.


<PAGE>
NOTE  18  -  FINANCIAL  INSTRUMENTS  WITH  OFF-BALANCE  SHEET  RISK
     The  Company  is party to financial instruments with off-balance sheet risk
in  the  normal course of business to meet the financing needs of its customers.
These  financial  instruments  include  commitments to extend credit and standby
letters  of  credit  and  involve,  to  varying  degrees, elements of credit and
interest rate risk in excess of the amount recognized in the balance sheet.  The
Company's  exposure  to  credit loss in the event of nonperformance by the other
party  to  the financial instrument for commitments to extend credit and standby
letters  of  credit  is  represented  by  the  contractual  amounts  of  those
instruments.

     The  Company  uses  the  same  credit  and  collateral  policies  in making
commitments  and  conditional  obligations  as  it  does  for  on-balance  sheet
instruments.  The  Company  evaluates  each  customer's  creditworthiness  on  a
case-by-case  basis.  The  amount  of collateral obtained if deemed necessary by
the Company upon extension of credit is based on management's credit evaluation.
Commitments  to  extend  credit  are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have  fixed  expiration  dates  or  other termination clauses and may
require  payment  of  a  fee.  Since  many of the commitments may expire without
being  drawn  upon,  the  total  commitment amounts do not necessarily represent
future  cash  requirements.

     At December 31, 1998 the Company's commitments to extend additional credit,
including obligations under the Company's revolving credit card program, totaled
approximately  $40,453,000,  of  which  approximately  $7,619,000  represents
commitments  to extend credit at fixed rates of interest.  Commitments to extend
credit  at  fixed rates expose the Company to some degree of interest rate risk.
Included  in  the  Company's  total  commitments  are standby letters of credit.
Letters  of  credit  are  commitments  issued  by  the  Company to guarantee the
performance  of  a  customer to a third party and totaled $2,292,000 at December
31,  1998  The  credit risk involved in the underwriting of letters of credit is
essentially the same as that involved in extending loan facilities to customers.

NOTE  19  -  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS
     SFAS 107, "Disclosures about Fair Value of Financial Instruments", requires
disclosure of fair value information, whether or not recognized in the statement
of  financial position, when it is practicable to estimate fair value.  SFAS 107
defines  a financial instrument as cash, evidence of an ownership interest in an
entity,  or  contractual obligations which require the exchange of cash or other
financial  instruments.  Certain  items  are  specifically  excluded  from  the
disclosure  requirements,  including  the  Company's  common stock, premises and
equipment,  and  other  assets  and  liabilities.

     Fair  value approximates book value for the following financial instruments
due  to  the  short-term  nature  of  the  instrument:  cash and due from banks,
interest-bearing  deposits in banks, federal funds sold, federal funds purchased
and  securities  sold under repurchase agreements, short-term FHLB advances, and
other  short-term  borrowings.  Fair value of investment securities is estimated
based  on quoted market prices where available.  If quoted market prices are not
available,  fair  values  are  based  on  quoted  market  prices  of  comparable
instruments.

     Fair  value  for  variable rate loans that reprice frequently and for loans
that  mature in less that one year is based on the carrying value, reduced by an
estimate  of  credit losses inherent in the portfolio.  Fair value of fixed rate
real  estate,  consumer,  commercial  and other loans maturing after one year is
based  on  the  discounted  present  value  of  the estimated future cash flows,
reduced  by  an  estimate  of credit losses inherent in the portfolio.  Discount
rates  used  in  these  computations approximate the rates currently offered for
similar  loans  of  comparable  terms  and  credit  quality.

     Fair  value  for demand deposit accounts and interest-bearing accounts with
no  fixed  maturity date is equal to the carrying value.  Certificate of deposit
accounts  maturing  during 1999 are valued at their carrying value.  Certificate
of  deposit accounts maturing after 1999 are estimated by discounting cash flows
from  expected  maturities  using current interest rates on similar instruments.
Fair  value  for  long-term  debt  is  based  on discounted cash flows using the
current  market  rate.



<PAGE>
NOTE  19  -  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS  -  CONTINUED
     The Company has used management's best estimate of fair values based on the
above assumptions.  Thus, the fair values presented may not be the amounts which
could  be  realized  in  an  immediate sale or settlement of the instrument.  In
addition,  any income tax or other expenses which would be incurred in an actual
sale  or  settlement  are  not  taken  into  consideration  in  the  fair values
presented.

     The  estimated  fair  values  of the Company's financial instruments are as
follows:

<TABLE>
<CAPTION>


(dollars in thousands)                                     1998                   1997
----------------------                             ---------------------   ---------------------
                                                   Carrying    Estimated   Carrying    Estimated
                                                    Amount    Fair Value    Amount    Fair Value
                                                   ---------  -----------  ---------  -----------
<S>                                                <C>        <C>          <C>        <C>
Financial Assets:
Cash and due from banks                            $   5,377  $     5,377  $   5,737  $     5,737
Interest-bearing bank balances                           623          623        704          704
Federal funds sold                                       400          400      2,920        2,920
Investment securities available for sale              27,102       27,102     28,213       28,213
Loans, net                                           128,842      133,856    117,027      116,438
Financial Liabilities:
Deposits                                             140,243      139,905    140,928      141,181
Federal funds purchased and repurchase agreements      3,566        3,566        803          803
Other short-term borrowings                              820          820      1,000        1,000
FHLB advances                                          8,000        7,884      2,000        2,000

</TABLE>

NOTE  20  -  PARENT  COMPANY  FINANCIAL  INFORMATION
     The  following  is  condensed  financial  information  of  Summit Financial
Corporation  (parent  company  only)  at  December 31, 1998 and 1997 and for the
years  ended  December  31,  1998,  1997  and  1996.

<TABLE>
<CAPTION>


                          SUMMIT FINANCIAL CORPORATION
                            CONDENSED BALANCE SHEETS

                                          December 31,
(dollars in thousands)                   1998     1997
                                       --------  -------
<S>                                    <C>       <C>
ASSETS
Cash                                   $   154   $    34
Investment in bank subsidiary           14,016    11,882
Investment in nonbank subsidiary            (1)       67
Due from subsidiaries                    1,864     1,930
Other assets                                 2         3
                                       --------  -------
                                       $16,035   $13,916
                                       ========  =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Accruals and other liabilities         $    38   $    47
Due to subsidiaries                          3         -
Other borrowings                           320       500
Shareholders' equity                    15,674    13,369
                                       --------  -------
                                       $16,035   $13,916
                                       ========  =======
</TABLE>




<PAGE>
NOTE  20  -  PARENT  COMPANY  FINANCIAL  INFORMATION  -  CONTINUED
<TABLE>
<CAPTION>


                          SUMMIT FINANCIAL CORPORATION
                         CONDENSED STATEMENTS OF INCOME

                              For the Years Ended December 31,
(dollars in thousands)                1998     1997     1996
                                     -------  -------  -------
<S>                                  <C>      <C>      <C>
Interest income                      $  176   $  175   $  181 
Interest expense                        (33)     (13)     (30)
                                     -------  -------  -------
Net interest income                     143      162      151 
Other operating expenses                (65)     (40)     (29)
                                     -------  -------  -------
Net operating income                     78      122      122 
Equity in undistributed net income
 of subsidiaries                      1,843    1,493      924 
                                     -------  -------  -------
Income before taxes                   1,921    1,615    1,046 
Income taxes                            (26)     (40)     (44)
                                     -------  -------  -------
Net income                           $1,895   $1,575   $1,002 
                                     =======  =======  =======

</TABLE>



<TABLE>
<CAPTION>

                        CONDENSED STATEMENTS OF CASH FLOWS

                                                 For the Years Ended December 31,
(dollars in thousands)                                 1998      1997      1996
                                                     --------  --------  --------
<S>                                                  <C>       <C>       <C>
Operating activities:
Net income                                           $ 1,895   $ 1,575   $ 1,002 
Adjustments to reconcile net income to net cash:
Equity in undistributed net income of subsidiaries    (1,843)   (1,493)     (924)
Decrease in other assets                                   1         -        21 
(Decrease) increase in other liabilities                  (9)       19       (51)
Amortization of deferred compensation                    101         -         - 
Deferred taxes                                             -         2        25 
                                                     --------  --------  --------
                                                         145       103        73 
                                                     --------  --------  --------
INVESTING ACTIVITIES:
Net decrease (increase) in due from subsidiary            66      (129)     (701)
Net increase in due to subsidiary                          3         -         - 
Maturities of investment securities                        -         -     2,000 
Capital contribution to bank subsidiary                    -      (500)   (1,000)
                                                     --------  --------  --------
                                                          69      (629)      299 
                                                     --------  --------  --------
FINANCING ACTIVITIES:
Proceeds from notes payable                                -       500        50 
Repayments of notes payable                             (180)      (50)     (600)
Employee stock options exercised                          88        72        28 
Cash paid in lieu of fractional shares                    (2)       (5)       (3)
                                                     --------  --------  --------
                                                         (94)      517      (525)
                                                     --------  --------  --------
Net change in cash and cash equivalents                  120        (9)     (153)
Balance, beginning of year                                34        43       196 
                                                     --------  --------  --------
Balance, end of year                                 $   154   $    34   $    43 
                                                     ========  ========  ========

</TABLE>



<PAGE>

NOTE  21  -  QUARTERLY  FINANCIAL  DATA  (UNAUDITED)
     Consolidated  quarterly  operating  data for the years ended December 31 is
summarized  as  follows  (per  share data has been restated to reflect the stock
split  and  all  distributions  issued):

<TABLE>
<CAPTION>



(dollars in thousands, 
except per share data)                                  1998                                       1997
----------------------               -----------------------------------------    -----------------------------------------
                                       First     Second      Third     Fourth      First     Second      Third     Fourth
                                      Quarter    Quarter    Quarter    Quarter    Quarter    Quarter    Quarter    Quarter
                                     ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                                  <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Interest income                      $  3,550   $  3,588   $  3,691   $  3,587   $  3,060   $  3,269   $  3,474   $  3,578 
Interest expense                       (1,687)    (1,732)    (1,747)    (1,636)    (1,400)    (1,513)    (1,731)    (1,760)
                                     ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Net interest income                     1,863      1,856      1,944      1,951      1,660      1,756      1,743      1,818 
Provision for loan losses                 (50)       (51)       (40)      (149)       (87)      (124)       (45)      (136)
                                     ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Net interest income after
  provision for loan losses             1,813      1,805      1,904      1,802      1,573      1,632      1,698      1,682 
Other income                              383        384        339        302        240        254        259        282 
Other expenses                         (1,545)    (1,465)    (1,459)    (1,357)    (1,274)    (1,255)    (1,281)    (1,340)
                                     ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Income before taxes                       651        724        784        747        539        631        676        624 
Income taxes                             (236)      (269)      (284)      (222)      (199)      (231)      (244)      (221)
                                     ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Net income                                415        455        500        525        340        400        432        403 
Unrealized net gain (loss) on
  investments available for sale,
  net of taxes                             38          7        163         15        (83)        76         60         37 
                                     ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Comprehensive income                 $    453   $    462   $    663   $    540   $    257   $    476   $    492   $    440 
                                     =========  =========  =========  =========  =========  =========  =========  =========
NET INCOME PER SHARE:
   Basic                             $   0.15   $   0.15   $   0.16   $   0.17   $   0.11   $   0.13   $   0.15   $   0.14 
   Diluted                           $   0.12   $   0.13   $   0.13   $   0.15   $   0.10   $   0.12   $   0.14   $   0.12 
AVERAGES COMMON SHARES OUTSTANDING:
   Basic                                3,024      3,029      3,032      3,037      2,958      2,962      2,965      2,981 
   Diluted                              3,554      3,604      3,606      3,589      3,201      3,191      3,228      3,430 

</TABLE>



NOTE  22  -  SEGMENT  INFORMATION
     The  Company reports information about its operating segments in accordance
with  SFAS  131,  "Disclosures  about  Segments  of  an  Enterprise  and Related
Information".  Summit  Financial  Corporation  is the parent holding company for
Summit National Bank ("Bank"), a nationally chartered bank, and Freedom Finance,
Inc.  ("Finance"),  a  consumer  finance  company.  Through its bank subsidiary,
which  commenced  operations  in July 1990, the Company provides a full range of
banking  services,  including  offering demand and time deposits, commercial and
consumer  loans,  and  nondeposit  investment  services.  The Bank currently has
three  full-service branches in Greenville, South Carolina.  The Finance Company
commenced  operations  in November 1994 and makes and services small, short-term
installment  loans and related credit insurance products to individuals from its
eleven offices throughout South Carolina. The Company considers the Bank and the
Finance  Company  separate  business  segments.  Financial  performance for each
segment is detailed in the following tables.  Included in the "Corporate" column
are  amounts  for  general corporate activities and eliminations of intersegment
transactions.

<PAGE>
NOTE  22  -  SEGMENT  INFORMATION  -  CONTINUED
<TABLE>
<CAPTION>



(dollars in thousands)        Bank      Finance    Corporate     Total
--------------------------  ---------  ---------  -----------  ---------
AT AND FOR THE YEAR ENDED
DECEMBER 31, 1998
<S>                         <C>        <C>        <C>          <C>
Interest income             $ 12,912   $  1,577         ($73)  $ 14,416 
Interest expense              (6,731)      (286)         215     (6,802)
                            ---------  ---------  -----------  ---------
Net interest income            6,181      1,291          142      7,614 
Provision for loan losses       (146)      (144)           -       (290)
Other income                   1,156        300          (48)     1,408 
Other expenses                (4,260)    (1,550)         (16)    (5,826)
                            ---------  ---------  -----------  ---------
Income before taxes            2,931       (103)          78      2,906 
Income taxes                  (1,020)        35          (26)    (1,011)
                            ---------  ---------  -----------  ---------
Net income                  $  1,911       ($68)  $       52   $  1,895 
                            =========  =========  ===========  =========
Net loans                   $127,327   $  2,660      ($1,145)  $128,842 
                            =========  =========  ===========  =========
Total assets                $168,072   $  3,634      ($1,221)  $170,485 
                            =========  =========  ===========  =========
</TABLE>


<TABLE>
<CAPTION>



(dollars in thousands)        Bank      Finance    Corporate     Total
--------------------------  ---------  ---------  -----------  ---------
AT AND FOR THE YEAR ENDED
DECEMBER 31, 1997
<S>                         <C>        <C>        <C>          <C>
Interest income             $ 11,858   $  1,614         ($91)  $ 13,381 
Interest expense              (6,352)      (304)         252     (6,404)
                            ---------  ---------  -----------  ---------
Net interest income            5,506      1,310          161      6,977 
Provision for loan losses       (216)      (176)           -       (392)
Other income                     780        303          (48)     1,035 
Other expenses                (3,589)    (1,569)           8     (5,150)
                            ---------  ---------  -----------  ---------
Income before taxes            2,481       (132)         121      2,470 
Income taxes                    (900)        45          (40)      (895)
                            ---------  ---------  -----------  ---------
Net income                  $  1,581       ($87)  $       81   $  1,575 
                            =========  =========  ===========  =========
Net loans                   $115,548   $  2,579      ($1,100)  $117,027 
                            =========  =========  ===========  =========
Total assets                $157,701   $  3,698      ($1,120)  $160,279 
                            =========  =========  ===========  =========
</TABLE>


<TABLE>
<CAPTION>



(dollars in thousands)        Bank      Finance    Corporate     Total
--------------------------  ---------  ---------  -----------  ---------
AT AND FOR THE YEAR ENDED
DECEMBER 31, 1996
<S>                         <C>        <C>        <C>          <C>
Interest income             $  9,348   $  1,253         ($54)  $ 10,547 
Interest expense              (4,939)      (230)         205     (4,964)
                            ---------  ---------  -----------  ---------
Net interest income            4,409      1,023          151      5,583 
Provision for loan losses       (361)      (155)           -       (516)
Other income                     793        232          (45)       980 
Other expenses                (3,215)    (1,202)          16     (4,401)
                            ---------  ---------  -----------  ---------
Income before taxes            1,626       (102)         122      1,646 
Income taxes                    (635)        35          (44)      (644)
                            ---------  ---------  -----------  ---------
Net income                  $    991       ($67)  $       78   $  1,002 
                            =========  =========  ===========  =========
Net loans                   $ 99,766   $  2,339        ($900)  $101,205 
                            =========  =========  ===========  =========
Total assets                $131,648   $  3,447        ($933)  $134,162 
                            =========  =========  ===========  =========
</TABLE>





<PAGE>
                          INDEPENDENT AUDITORS' REPORT



The  Board  of  Directors
Summit  Financial  Corporation


     We  have  audited  the  accompanying  consolidated balance sheets of Summit
Financial  Corporation  and subsidiaries (the "Company") as of December 31, 1998
and  1997,  and  the  related  consolidated  statements of income, shareholders'
equity  and  comprehensive  income  and  cash flows for each of the years in the
three-year  period  ended  December  31,  1998.  These  consolidated  financial
statements  are  the  responsibility  of  the  Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements  based  on  our  audits.

     We  conducted  our  audits  in  accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing  the  accounting  principles  used  and  significant estimates made by
management,  as well as evaluating the overall financial statement presentation.
We  believe  that  our  audits  provide  a  reasonable  basis  for  our opinion.

     In  our  opinion,  the  consolidated financial statements referred to above
present  fairly,  in  all  material  respects,  the financial position of Summit
Financial Corporation and subsidiaries as of December 31, 1998 and 1997, and the
results  of  their  operations and their cash flows for each of the years in the
three-year period ended December 31, 1998, in conformity with generally accepted
accounting  principles.



Greenville,  South  Carolina          /s/  KPMG  Peat  Marwick  LLP
January  22,  1999



<PAGE>

ITEM  9.     CHANGES  IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL  DISCLOSURES

     There  has  been  no  changes  in  or  disagreements  with  accountants  on
accounting  and  financial  disclosure as defined by Item 304 of Regulation S-K.


                                    PART III

ITEM  10.     DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

     The  information required by this item is set forth in the definitive Proxy
Statement of the Company filed in connection with its 1999 Annual Meeting of the
Shareholders,  which information is incorporated herein by reference as follows:
     (a)  Identification  of  Directors:  Page  4  of  the  1999 Proxy Statement
     (b)  Identification  of  Executive  Officers:  Page  7  of  the  1999 Proxy
Statement
     (c)  Identification  of  Certain  Significant  Employees:  NONE
     (d)  Family  Relationships:  NONE
     (e)  Business  experience:  Pages  5-7  of  the  1999  Proxy  Statement
     (f)  Involvement  in  Certain  Legal  Proceedings:  NONE
     (g)  Promoters  and  Control  Persons:  NONE

ITEM  11.     EXECUTIVE  COMPENSATION

     The  information required by this item is set forth in the definitive Proxy
Statement  of  the  Company  filed in connection with its 1998 Annual Meeting of
Shareholders,  which information is incorporated herein by reference as follows:

     (a)  -  (f)  Executive  Compensation  tables:  Pages  7-8 of the 1999 Proxy
Statement
     (g)  Compensation  of  Directors:  Page  3  of  the  1999  Proxy  Statement
     (h)  Employment  Contracts:  Page  9  of  the  1999  Proxy  Statement
     (i)  Repricing  of  Options/SARs:  NONE
     (j) Compensation Committee Interlocks:  Page 11 of the 1999 Proxy Statement
     (k) Compensation Committee Report:  Pages 10-11 of the 1999 Proxy Statement
     (l)  Performance  Graph:  Page  12  of  the  1999  Proxy  Statement

ITEM  12.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT

     The  information  required  by  this  item  is  set forth under the heading
"Election  of  Directors"  on pages 4-5 in the definitive Proxy Statement of the
Company  filed in connection with its 1999 Annual Meeting of Shareholders, which
information  is  incorporated  herein  by  reference.

ITEM  13.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     The  information  required  by  this  item  is  set forth under the heading
"Compensation  Committee  Interlocks  and  Insider Participation" on page 11 and
"Certain  Transactions"  on  page  13  in  the definitive Proxy Statement of the
Company  filed in connection with its 1999 Annual Meeting of Shareholders, which
information  is  incorporated  herein  by  reference.


<PAGE>
                                     PART IV

ITEM  14.     EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES  &  REPORTS ON FORM 8-K

     (a)     List  of  documents  filed  as  a  part  of  this  report:

     1.  Financial  Statements:

          The  following  consolidated  financial  statements  and  report  of
independent  auditors  of  the  Company  are  included in Part I, Item 8 hereof:

          Consolidated  Balance  Sheets  as  of  December  31,  1998  and  1997
          Consolidated Statements of Operations For The Years Ended December 31,
1998,  1997,  1996
          Consolidated  Statements  of  Shareholders'  Equity  And Comprehensive
Income  For  The  Years  Ended  December  31,  1998,  1997,  and  1996
          Consolidated Statements of Cash Flows For The Years Ended December 31,
1998,  1997,  1996
          Notes  to  Consolidated  Financial  Statements
          Report  of  Independent  Auditors

     2.  Financial  Statement  Schedules:

All other consolidated financial statements or schedules have been omitted since
the required information is included in the consolidated financial statements or
notes thereto referenced in Item 14(a)1 above, or is not applicable or required.

     3.  Exhibits  (numbered  in  accordance  with  Item 601 of Regulation S-K):

     3.1     Articles of Incorporation, as amended (incorporated by reference to
exhibits  filed  with  the Registrant's Registration Statement on Form S-1 Under
The  Securities  Act of 1933, as filed with the SEC on October 6, 1989, File No.
33-31466).

     3.2     Bylaws,  as  amended  (incorporated  by reference to exhibits filed
with  the  Registrant's  Registration  Statement  on Amendment No. 1 To Form S-1
Under  The  Securities  Act  of 1933, as filed with the SEC on December 7, 1989,
File  No.  33-31466).

     4.     Form  of  Certificate for Common Stock (incorporated by reference to
exhibits  filed  with the Registrant's Registration Statement on Amendment No. 1
To  Form S-1 Under The Securities Act of 1933, as filed with the SEC on December
7,  1989,  File  No.  33-31466).

     10.1     Summit Financial Corporation Incentive Stock Plan (incorporated by
reference to exhibits filed with the Registrant's Registration Statement on Form
S-1  Under The Securities Act of 1933, as filed with the SEC on October 6, 1989,
File  No.  33-31466).

     10.2     Lease  Agreement  for  Bank  Site  (incorporated  by  reference to
exhibits  filed  with  the Registrant's Registration Statement on Form S-1 Under
The  Securities  Act of 1933, as filed with the SEC on October 6, 1989, File No.
33-31466).

     10.3     Employment  Agreement  of  J.  Randolph  Potter dated December 21,
1998.

     10.4     Employment  Agreement  of  Blaise B. Bettendorf dated December 21,
1998.

     10.5     Summit  Financial  Corporation Restricted Stock Plan (incorporated
by reference to exhibits filed with Summit Financial Corporation's Annual Report
to  the  Securities  and  Exchange  Commission  on  Form 10-K for the year ended
December  31,  1993,  File  No.  000-19235).

     10.6     Summit  Financial  Corporation  Non-Employee  Stock  Option  Plan
(incorporated by reference to exhibits filed with Summit Financial Corporation's
Annual  Report  to  the  Securities and Exchange Commission on Form 10-K for the
year  ended  December  31,  1994,  File  No.  000-19235).

     10.7     Employment  Agreement of James B. Schwiers dated December 15, 1997
(incorporated by reference to exhibits filed with Summit Financial Corporation's
Annual  Report  to  the  Securities and Exchange Commission on Form 10-K for the
year  ended  December  31,  1997,  File  No.  000-19235).

     21     Subsidiaries  of  Summit  Financial  Corporation:
                    Summit  National  Bank,  a  nationally  chartered  bank.
                    Freedom  Finance,  Inc.,  a  consumer  finance  company.

     23     Consent  of  KPMG  Peat  Marwick LLP with regard to S-8 Registration
Statements for Summit Financial Corporation Restricted Stock Plan (as filed with
the  Securities  and  Exchange  Commission,  "SEC",  August  23,  1994, File No.
33-83538);  Summit  Financial  Corporation Incentive Stock Option Plan (as filed
with the SEC July 19, 1995, File No. 33-94962); and Summit Financial Corporation
1995  Non-Employee  Stock Option Plan (as filed with the SEC July 19, 1995, File
No.  33-94964).

     27     Financial  data  schedule

NOTE:  The  exhibits  listed above will be furnished to any security holder upon
written  request  to  Ms.  Blaise B. Bettendorf, Chief Financial Officer, Summit
Financial  Corporation,  Post Office Box 1087, Greenville, South Carolina 29602.
The Registrant will charge a fee of $.25 per page for photocopying such exhibit.


     (b)     No  reports  on  Form  8-K  were filed by the Registrant during the
fourth  quarter  of  1998.

     (c)     Exhibits required to be filed with this report, which have not been
previously  filed  as indicated in Item 14(a) above, are submitted as a separate
section  of  this  report.

     (d)     Not  applicable.



<PAGE>

                                   SIGNATURES

     Pursuant  to  the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its  behalf  by  the  undersigned,  thereunto  duly  authorized,  in the City of
Greenville,  South  Carolina,  on  the  22nd  day  of  March,  1999.

                              SUMMIT  FINANCIAL  CORPORATION
                                /s/  J.  Randolph  Potter
                              ---------------------------
Dated:  March  22,  1999      J.  Randolph  Potter,  President

     Pursuant  to  the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by  the  following  persons  on  behalf of the
Registrant  and  in  the  capacities  and  on  the  dates  indicated.

<TABLE>
<CAPTION>


   SIGNATURE                    TITLE                          
<S>                         <C>                         <C>             
  /s/ J. Randolph Potter    President, Chief Executive  March 22, 1999
--------------------------                                                         
J. Randolph Potter          Officer and Director

  /s/ Blaise B. Bettendorf  Senior Vice President       March 22, 1999
--------------------------                                                         
Blaise B. Bettendorf        (Principal Financial and
                            Accounting Officer)

  /s/ C. Vincent Brown      Chairman                    March 22, 1999
--------------------------                                                         
C. Vincent Brown

 /s/ John A. Kuhne          Vice Chairman               March 22, 1999
--------------------------                                                         
John A. Kuhne

  /s/ David C. Poole        Secretary                   March 22, 1999
--------------------------                                                         
David C. Poole

-------------------------   Director                    March 22, 1999
Ivan E. Block

  /s/ John A. Burgess       Director                    March 22, 1999
--------------------------                                                         
John A. Burgess

  /s/ J. Earle Furman, Jr.  Director                    March 22, 1999
--------------------------                                                         
J. Earle Furman, Jr.

  /s/ Charles S. Houser     Director                    March 22, 1999
--------------------------                                                         
Charles S. Houser

 /s/ John W. Houser         Director                    March 22, 1999
--------------------------                                                         
John W. Houser

 /s/ T. Wayne McDonald      Director                    March 22, 1999
--------------------------                                                         
T. Wayne McDonald

  /s/ Larry A. McKinney     Director                    March 22, 1999
--------------------------                                                         
Larry A. McKinney

  /s/ George O. Short, Jr.  Director                    March 22, 1999
--------------------------                                                         
George O. Short, Jr.
</TABLE>


<PAGE>

EXHIBIT 10.3  -  EMPLOYMENT AGREEMENT OF J. RANDOLPH POTTER


STATE  OF  SOUTH  CAROLINA)
                          )          EMPLOYMENT  AGREEMENT
COUNTY  OF  GREENVILLE    )


          THIS  EMPLOYMENT  AGREEMENT,  made  and  entered into this 21st day of
December,  1998,  by and between J. RANDOLPH POTTER, a resident of the State and
County  aforesaid,  hereinafter  referred  to as "Employee" and Summit Financial
Corporation,  a  corporation duly chartered pursuant to the laws of the State of
South  Carolina,  hereinafter  referred  to  as  "Employer".
W  I  T  N  E  S  S  E  T  H:
          WHEREAS, the Employer is a corporation chartered under the laws of the
State  of  South  Carolina  and
          WHEREAS,  Employee is the President and Chief Executive Officer of the
banking  operation  which  is  a  wholly-owned  subsidiary  of the Employer; and
          WHEREAS,  the  terms  of this Agreement are subject to the approval by
the  Board  of  Directors  of  the  Employer;
          NOW, THEREFORE, in consideration of the mutual promises of the parties
and  the  mutual benefits they will gain by the performance thereof, the parties
hereto  agree  as  follows:
1.      Employment.  That  the  Employer,  subject  to  the terms and conditions
hereof,  does  hereby agree to employ the Employee and the Employee accepts such
employment,  from  the date hereof and to continue therefrom until terminated as
hereinafter  provided.

<PAGE>
          2.  Duties.  That  the  Employee  is  employed to act as President and
Chief  Executive  Officer  of  the  banking  entity,  which  is  a  wholly-owned
subsidiary  of  the  Employer  and to perform such other duties on behalf of the
Employer,  as  well  as any subsidiary thereof, which will benefit the Employer.
          3.  Termination  by  Employee.  That  the  Employee  may terminate his
employment  hereunder  at  any  time  after  he has given ninety (90) days prior
written  notice  to  the Employer, such notice to be accomplished by delivery of
such written termination to either the Chairman or Vice Chairman of the Board of
Directors  (provided that the Employee is not serving in either capacity) of the
Employer.
          4.  Termination  by  Employer.  That  the  Employer  may  terminate
immediately  the  Employee's  employment  hereunder at any time, with or without
cause,  by  giving  written  notice  of  such  termination  of employment to the
Employee.
          5.  Automatic  Termination  of  Employee.  That  the employment of the
Employee  shall  be  automatically  terminated  upon  the  earlier of any of the
following:
               (a)     The  death  of  the  Employee.
               (b)     The  disability  of  the  Employee  so  as to prevent the
Employee  from  adequately  performing  his  duties  contemplated hereunder (the
determination  of any such disability shall be within the sole discretion of the
Board  of  Directors  of the Employer).  The Employee will be compensated at his
normal rate until the earlier of: (i) such time as he begins to receive benefits
from  his disability insurance; or (ii) a period ending one hundred eighty (180)
days  from  such  determination  of  disability.
<PAGE>
          6.  Compensation.  That  for all of his duties hereunder, the Employee
shall receive compensation at the rate currently in place.  However, anything to
the  contrary  notwithstanding, this compensation shall terminate immediately in
the  event  of  termination  of  employment  hereunder for any reason whatsoever
except  for any payments which might be due the Employee under paragraph 5(b) or
by reason of the Employer enforcing its covenant not to compete set forth herein
below.
          7.  Covenant  Not  to  Compete.
               (a)  That  in  the  event the Employee voluntarily terminates his
employment  with  the  Employer  or  any  subsidiary  of  the Employer, that the
Employee  agrees that he will not, directly or indirectly, own, manage, operate,
control,  be  employed by, participate in or be connected in any manner with the
ownership,  management  or  operation  of  any  business similar to that type of
business  then  conducted  by  the  Employer  or by any subsidiary for which the
Employee  is  then  actively engaged for a period of twelve (12) months from the
date  of  such  termination  of  employment and within the radius of twenty (20)
miles  from  where  the  Employee has his main office or five (5) miles from any
branch office, while he is performing his services hereunder.  Further, that the
Employee  acknowledges  that  this covenant not to compete with the Employer, or
such  subsidiary,  is  not made under duress and that it is an essential part of
the  Agreement,  without  which the Employer would not have engaged or continued
the  services  of  the  Employee.  Further,  the Employee acknowledges that this
covenant  not  to  compete  is  for  such  good  and  valid

<PAGE>
consideration,  the  receipt of which is hereby acknowledged and Employee agrees
that  in  the event of a threatened breach of his covenant under this Agreement,
that  any  remedy  at  law  would be inadequate and Employer may seek injunctive
relief,  as  well  as  damages.
          b)  That in the event that the Employer shall terminate the employment
of  the  Employee, without cause ("cause" is defined herein below), the Employer
agrees  to  pay  the  Employee one hundred (100%) percent of his regular monthly
salary  (regular monthly salary shall be computed by dividing by twelve (12) the
Employee  s  W-2  cash  salary  and  cash bonus income from the Employer for the
calendar  year  immediately  preceding  such  termination  of employment).  Such
payment to begin on the last day of the first month following the termination of
employment  and  to  continue  for  one (1) year from the date of termination of
employment.  At  Employer's  sole  option,  and  for  the  same  monthly payment
amounts,  this non-competition agreement may be continued up to a maximum of two
(2)  years  from  the date of termination of employment; PROVIDED, HOWEVER, that
after  one  (1)  year  from  the  date  of  termination, Employer shall have the
absolute  right,  in  its  sole discretion, to terminate, at any time, this said
non-competition agreement by giving thirty (30) days prior written notice to the
Employee,  mailed to the Employee s address designated in Item 8 hereof and this
covenant  not  to  compete shall terminate thirty (30) days after the mailing of
such  notice  and  the  payments  referred  to  herein  above  shall  likewise
automatically  terminate  on said date, after which termination by the Employer,
no  payments  shall  be  payable  as  it  is  expressly acknowledged by both the
Employee  and  the  Employer  that  Employer  shall
<PAGE>
have  no  obligation whatsoever to continue this covenant not to compete for any
period  of  time  beyond  one (1) year from the date of termination.  Naturally,
such notice of termination of such payments by the Employer shall, at that time,
release the Employee from his obligation not to compete.  Such non-compete shall
prevent  the Employee from, directly or indirectly, owning, managing, operating,
or being employed by, participating in or being connected in any manner with the
ownership,  management  and  operation  of  any business similar to that type of
business  then  conducted  by  the  Employer  or by any subsidiary for which the
Employee  is then actively engaged for a period of twelve (12) months (24 months
at  Employer's sole options) from the date of such termination of employment and
within  the radius of twenty (20) miles from the office of the Employer, or five
(5)  miles from any branch office, as the case may be, within which Employee has
his  main  office  while he is performing his services hereunder.  Further, that
the Employee acknowledges that this covenant not to compete with the Employer or
such  subsidiary  is  not  made under duress and that it is an essential part of
this  Agreement,  without which the Employer would not have engaged or continued
the  services  of  the  Employee.  Further,  the Employee acknowledges that this
covenant not to compete is for such good and valid consideration, the receipt of
which  is  hereby  acknowledged  and  Employee  agrees  that  in  the event of a
threatened  breach  of his covenant under this Agreement, that any remedy at law
would be inadequate and Employer may seek injunctive relief, as well as damages.

<PAGE>
          (c) That in the event that the Employer shall terminate the employment
of  the  Employee  for cause (with  cause" being defined under this Agreement to
mean  either:  (i)  willful  failure  of  the  Employee to substantially perform
prescribed duties other than a result of disability (the Employee shall be given
written  notice  of  an  alleged  willful  failure to substantially perform such
prescribed  duties  and  shall have a period of thirty (30) days to correct such
willful  failure  to  substantially perform such prescribed duties); or (ii) the
willful  engaging  in misconduct significantly detrimental to the Employer), the
Employer  agrees  to  pay the Employee one hundred (100%) percent of his regular
monthly  salary  (regular monthly salary shall be computed by dividing by twelve
(12)  the Employee's W-2 cash salary and cash bonus income from the Employer for
the  calendar  year  immediately preceding such termination of employment) for a
period  of  one  (1)  month.  Further, that in the event of such termination for
cause,  the  Employee  agrees  that  he  will  not, directly or indirectly, own,
manage, operate, control, be employed by, participate in, or be connected in any
manner  with  the  ownership, management or operation of any business similar to
that  type  of  business then conducted by the Employer or by any subsidiary for
which  the Employee is then actively engaged for a period of six (6) months from
the  date  of termination of employment and within a radius of twenty (20) miles
from  where  the employee has his main office, or five (5) miles from any branch
office,  while  he  is  performing  the  services  hereunder.  Further, that the
Employee  acknowledges  that  this covenant not to compete with the Employer, or
such  subsidiary,  is  not made under duress and that it is an essential part of
this  Agreement,  without  which  the  Employer  would  not  have 
<PAGE>
engaged  or  continued  the  services  of  the  Employee.  Further, the Employee
acknowledges  that  this  covenant  not  to  compete  is for such good and valid
consideration  and  Employee  agrees that in the event of a threatened breach of
his  covenant  under  this Agreement, that any remedy at law would be inadequate
and  Employer  may  seek  injunctive  relief,  as  well  as  damages.
          (d) That in the event the Employee is terminated by the Employer after
a  change  in  control  (as  hereinafter  defined) or by the Employer during the
pendency  of a potential change in control (other than for cause in either case)
or  by the Employee for good reason after a change in control, then the Employee
is  entitled  to  an amount equal to three (3) times his annual base pay amount,
calculated  as  the  average  of  the Employee s W-2 annual cash salary and cash
bonus  income  from  the  Employer  over the five (5) most recent taxable years.
Said  non-competition  amounts  are  to  be  paid  in  three  (3)  equal  annual
installments  without  any interest due thereon, the first installment being due
within  thirty  (30)  days  from  the  date  of  such  termination  and annually
thereafter  until  paid  in  full.  In  addition,  the  Employee  is entitled to
continued life, disability and medical insurance coverage for a period of twelve
(12)  months  and the use of office and secretarial services for six (6) months,
both  paid  for  by  the  Employer.  Said non-compete payments shall prevent the
Employee  from,  directly  or  indirectly, owning, managing, operating, or being
employed  by,  participating  in  or  being  connected  in  any  manner with the
ownership,  management  and  operation  of  any business similar to that type of
business  then  conducted  by  the  Employer  or by any subsidiary for which the
Employer  is  then  actively  engaged for a period of 36 months from the date of
such  termination  of  employment  and  within  the  radius  of  twenty  (20) 
<PAGE>
miles from the office of the Employer, or five (5) miles from any branch office,
as  the  case  may  be,  within  which  Employer has his main office while he is
performing his services hereunder.  Further, that the Employee acknowledges that
this  covenant  not  to compete with the Employer or such subsidiary is not made
under  duress  and that it is an essential part of this Agreement.  Further, the
Employee  acknowledges  that  this  covenant not to compete is for such good and
valid  consideration, the receipt of which is hereby acknowledged.  The Employer
and Employee acknowledge that any breach of this contract would cause damages to
the  Employer,  the  value  of  which would be difficult to determine.  For that
reason,  the  Employer  and  Employee  hereby  agree  upon  liquidated  damages
specifying  that  the  damages  that  the  Employer would incur as a result of a
breach  by  the  Employee  would be determined based on the present value of the
stream  of unpaid non-competition payments specified above.  In addition, in the
event  of a breach of the Employee s covenant under this Agreement, the Employer
may  seek  injunctive relief, as well as the liquidated damages set forth above.
     A  change in control occurs if: (i) any person or entity acting directly or
indirectly or through or in concert (other than persons who are presently on the
Board  of  Directors  for  the  Employer) with one or more persons, acquires the
power,  directly or indirectly, to vote twenty-five (25%) percent or more of any
class  of  voting  securities  of  the  Employer; or (ii) the Employer becomes a
subsidiary  of  another  corporation  or  is merged or consolidated into another
corporation.  A  potential  change  in  control  occurs if: (i) the Employer has
entered into an agreement, the consummation of which would result in a change in
control;  (ii)  any  person  publicly  announces  his  intention  to  take  or
<PAGE>
to  consider  taking actions which, if consummated, would constitute a change in
control;  or  (iii)  any  person  becomes the beneficial owner, as defined under
Securities and Exchange Commission rules, directly or indirectly of the Employer
s  securities  which  represent  nine and one-half (9.5%) percent or more of the
combined  voting power of the Employer's then outstanding securities entitled to
elect  directors;  or  (iv)  the  Board  of Directors adopts a resolution to the
effect  that  a  potential  change  in control for purposes of the agreement has
occurred.  A  potential  change  in  control  remains  pending  for  purposes of
receiving  payments under the agreement until the earlier of the occurrence of a
change  in  control  or a determination by the Board of Directors or a committee
thereof  (at  any  time)  that  a  change  of  control  is  not or was no longer
reasonably  expected  to  occur.
          Termination  of employment because of disability, retirement or death,
or  by  the  Employer for cause or by the Employee for any reason other than for
good  reason,  will  not  result  in  the  full  payment  of  benefits under the
provisions  of  paragraph 7(d) above.   Cause" is defined under the agreement to
mean:  (i) willful failure substantially to perform prescribed duties other than
as  a  result  of  disability;  or  (ii)  the  willful  engaging  in  misconduct
significantly  detrimental  to  the  Employer.   Good  reason"  for  Employee to
terminate  employment  with the Employer occurs if: (i) duties are assigned that
are  materially  inconsistent  with  previous  duties;  (ii)  duties  and
responsibilities  are  substantially reduced; (iii) base compensation is reduced
not  as  part  of  an  across-the-board  reduction  for  such  executives;  (iv)
participation  under compensation plans or arrangements generally made available
to  persons  at  the
<PAGE>
Employee s level of responsibility at the Employer is denied except as otherwise
provided;  (v) a successor fails to assume the agreement; or (vi) termination is
made  without  compliance  with  prescribed  procedures.
          8.  Addresses.  That,  unless mutually amended in writing, any notices
required or permitted to be given under this Agreement shall be sufficient if in
writing  and  sent  by  registered  mail  to  the  following  addresses:
          FOR  THE  EMPLOYER:
          Summit  Financial  Corporation
          C/O  C.  Vincent  Brown,  Chairman
          P  O  Box  1087
          Greenville,  SC  29602

          FOR  THE  EMPLOYEE:
          J.  Randolph  Potter
          19  Pristine  Drive
          Greer,  SC  29650

          9.  Vacation.  That  during  the  term of active employment hereunder,
the  Employee shall be entitled to an annual paid vacation of three (3) weeks to
be  taken  at such reasonable time or times as allowed by the Board of Directors
of  the  Employer.
     10.  Employee  Benefits.  That  the  Employee shall be entitled, during the
term  of  active  employment  hereunder, to those employee benefits currently in
place  for  the  Employee.
          11.  State  Law.  That  this Agreement is made pursuant to the laws of
the  State  of  South  Carolina  and  shall  be  construed  thereby.

<PAGE>
          12.  Entire  Agreement.  That  this Agreement constitutes the sole and
complete  agreement  between the Employer and the Employee and it is agreed that
no  verbal  or other statement, inducements or representations have been made to
or  relied upon by the Employee and that no modification to this Agreement shall
be  binding upon either party hereto unless in writing and signed by each party.
          13.  Binding  Effect.  That this Agreement is binding upon the parties
hereto, their successors, personal representatives, legal representatives, heirs
and assigns (however this Agreement shall not be assigned by the Employee unless
the  Employer  shall  agree  thereto  in  writing).
          IN  WITNESS  WHEREOF,  the  parties hereto have signed and sealed this
Agreement  on  the  date  above  first  written.

IN  THE  PRESENCE  OF:                  EMPLOYER:
                                        SUMMIT  FINANCIAL  CORPORATION
/s/  Karen  Dye                         By:   /s/  C.  Vincent  Brown
                                        Its:  Chairman
/s/  John  A.  Kuhne                    And:  /s/  Blaise  B.  Bettendorf
                                        Its:  Chief  Financial  Officer


                                        EMPLOYEE:
/s/  Blaise  B.  Bettendorf              /s/  J.  Randolph  Potter
/s/  Sharon  R.  Wilson



<PAGE>

EXHIBIT 10.4  -  EMPLOYMENT AGREEMENT OF BLAISE B. BETTENDORF


STATE  OF  SOUTH  CAROLINA     )
                               )          EMPLOYMENT  AGREEMENT
COUNTY  OF  GREENVILLE         )


                THIS  EMPLOYMENT  AGREEMENT, made and entered into this 21st day
of  December  1998, by and between BLAISE B. BETTENDORF, a resident of the State
and County aforesaid, hereinafter referred to as "Employee" and Summit Financial
Corporation,  a  corporation duly chartered pursuant to the laws of the State of
South  Carolina,  hereinafter  referred  to  as  "Employer".
W  I  T  N  E  S  S  E  T  H:
          WHEREAS, the Employer is a corporation chartered under the laws of the
State  of  South  Carolina  and
          WHEREAS,  Employee  is  the  Senior Vice President and Chief Financial
Officer  of  the  banking  operation  which  is a wholly-owned subsidiary of the
Employer;  and
          WHEREAS,  the  terms  of this Agreement are subject to the approval by
the  Board  of  Directors  of  the  Employer;
          NOW, THEREFORE, in consideration of the mutual promises of the parties
and  the  mutual benefits they will gain by the performance thereof, the parties
hereto  agree  as  follows:
          1.  Employment.  That  the  Employer,  subject  to  the  terms  and
conditions  hereof,  does  hereby  agree to employ the Employee and the Employee
accepts  such  employment,  from the date hereof and to continue therefrom until
terminated  as  hereinafter  provided.

<PAGE>
          2.  Duties.  That  the  Employee  is  employed  to  act as Senior Vice
President/Chief Financial Officer of the banking entity, which is a wholly-owned
subsidiary  of  the  Employer  and to perform such other duties on behalf of the
Employer,  as  well  as any subsidiary thereof, which will benefit the Employer.
          3.  Termination  by  Employee.  That  the  Employee  may terminate his
employment  hereunder  at  any  time  after  he has given ninety (90) days prior
written  notice  to  the Employer, such notice to be accomplished by delivery of
such  written  termination  to  either the Chairman of the Board of Directors or
President  (provided that the Employee is not serving in either capacity) of the
Employer.
          4.  Termination  by  Employer.  That  the  Employer  may  terminate
immediately  the  Employee's  employment  hereunder at any time, with or without
cause,  by  giving  written  notice  of  such  termination  of employment to the
Employee.
          5.  Automatic  Termination  of  Employee.  That  the employment of the
Employee  shall  be  automatically  terminated  upon  the  earlier of any of the
following:
               (a)     The  death  of  the  Employee.
               (b)     The  disability  of  the  Employee  so  as to prevent the
Employee  from  adequately  performing  his  duties  contemplated hereunder (the
determination  of any such disability shall be within the sole discretion of the
Board  of  Directors  of the Employer).  The Employee will be compensated at his
normal rate until the earlier of: (i) such time as he begins to receive benefits
from  his disability insurance; or (ii) a period ending one hundred eighty (180)
days  from  such  determination  of  disability.

<PAGE>
          6.  Compensation.  That  for all of his duties hereunder, the Employee
shall receive compensation at the rate currently in place.  However, anything to
the  contrary  notwithstanding, this compensation shall terminate immediately in
the  event  of  termination  of  employment  hereunder for any reason whatsoever
except  for any payments which might be due the Employee under paragraph 5(b) or
by reason of the Employer enforcing its covenant not to compete set forth herein
below.
          7.  Covenant  Not  to  Compete.
               (a)  That  in  the  event the Employee voluntarily terminates his
employment  with  the  Employer  or  any  subsidiary  of  the Employer, that the
Employee  agrees that he will not, directly or indirectly, own, manage, operate,
control,  be  employed by, participate in or be connected in any manner with the
ownership,  management  or  operation  of  any  business similar to that type of
business  then  conducted  by  the  Employer  or by any subsidiary for which the
Employee  is  then  actively engaged for a period of twelve (12) months from the
date  of  such  termination  of  employment and within the radius of twenty (20)
miles  from  where  the  Employee has his main office or five (5) miles from any
branch office, while he is performing his services hereunder.  Further, that the
Employee  acknowledges  that  this covenant not to compete with the Employer, or
such  subsidiary,  is  not made under duress and that it is an essential part of
the  Agreement,  without  which the Employer would not have engaged or continued
the  services  of  the  Employee .  Further, the Employee acknowledges that this
covenant  not  to  compete  is  for  such  good  and  valid

<PAGE>
consideration,  the  receipt of which is hereby acknowledged and Employee agrees
that  in  the event of a threatened breach of his covenant under this Agreement,
that  any  remedy  at  law  would be inadequate and Employer may seek injunctive
relief,  as  well  as  damages.
          (b) That in the event that the Employer shall terminate the employment
of  the  Employee, without cause ("cause" is defined herein below), the Employer
agrees  to  pay  the  Employee one hundred (100%) percent of his regular monthly
salary  (regular monthly salary shall be computed by dividing by twelve (12) the
Employee's  W-2  cash  salary  and  cash  bonus income from the Employer for the
calendar  year  immediately  preceding  such  termination  of employment).  Such
payment to begin on the last day of the first month following the termination of
employment  and  to  continue  for  one (1) year from the date of termination of
employment.  At  Employer's  sole  option,  and  for  the  same  monthly payment
amounts,  this non-competition agreement may be continued up to a maximum of two
(2)  years  from  the date of termination of employment; PROVIDED, HOWEVER, that
after  one  (1)  year  from  the  date  of  termination, Employer shall have the
absolute  right,  in  its  sole discretion, to terminate, at any time, this said
non-competition agreement by giving thirty (30) days prior written notice to the
Employee,  mailed to the Employee's address designated in Item 8 hereof and this
covenant  not  to  compete shall terminate thirty (30) days after the mailing of
such  notice  and  the  payments  referred  to  herein  above  shall  likewise
automatically  terminate  on said date, after which termination by the Employer,
no  payments  shall  be  payable  as  it  is  expressly acknowledged by both the
Employee  and  the  Employer  that  Employer  shall

<PAGE>
have  no  obligation whatsoever to continue this covenant not to compete for any
period  of  time  beyond  one (1) year from the date of termination.  Naturally,
such notice of termination of such payments by the Employer shall, at that time,
release the Employee from his obligation not to compete.  Such non-compete shall
prevent  the Employee from, directly or indirectly, owning, managing, operating,
or being employed by, participating in or being connected in any manner with the
ownership,  management  and  operation  of  any business similar to that type of
business  then  conducted  by  the  Employer  or by any subsidiary for which the
Employee  is then actively engaged for a period of twelve (12) months (24 months
at  Employer s sole options) from the date of such termination of employment and
within  the radius of twenty (20) miles from the office of the Employer, or five
(5)  miles from any branch office, as the case may be, within which Employee has
his  main  office  while he is performing his services hereunder.  Further, that
the Employee acknowledges that this covenant not to compete with the Employer or
such  subsidiary  is  not  made under duress and that it is an essential part of
this  Agreement,  without which the Employer would not have engaged or continued
the  services  of  the  Employee.  Further,  the Employee acknowledges that this
covenant not to compete is for such good and valid consideration, the receipt of
which  is  hereby  acknowledged  and  Employee  agrees  that  in  the event of a
threatened  breach  of his covenant under this Agreement, that any remedy at law
would be inadequate and Employer may seek injunctive relief, as well as damages.

<PAGE>
                  (c)  That  in  the event that the Employer shall terminate the
employment  of  the  Employee  for  cause (with "cause" being defined under this
Agreement  to  mean either: (i) willful failure of the Employee to substantially
perform  prescribed duties other than a result of disability (the Employee shall
be  given  written notice of an alleged willful failure to substantially perform
such  prescribed  duties  and shall have a period of thirty (30) days to correct
such  willful  failure to substantially perform such prescribed duties); or (ii)
the  willful  engaging in misconduct significantly detrimental to the Employer),
the  Employer  agrees  to  pay  the  Employee  one hundred (100%) percent of his
regular  monthly salary (regular monthly salary shall be computed by dividing by
twelve  (12)  the  Employee's  W-2  cash  salary  and cash bonus income from the
Employer  for  the  calendar  year  immediately  preceding  such  termination of
employment)  for  a period of one (1) month.  Further, that in the event of such
termination  for  cause,  the  Employee  agrees  that  he  will not, directly or
indirectly, own, manage, operate, control, be employed by, participate in, or be
connected  in  any  manner  with  the  ownership, management or operation of any
business  similar  to that type of business then conducted by the Employer or by
any  subsidiary  for which the Employee is then actively engaged for a period of
six (6) months from the date of termination of employment and within a radius of
twenty (20) miles from where the employee has his main office, or five (5) miles
from any branch office, while he is performing the services hereunder.  Further,
that  the  Employee  acknowledges  that  this  covenant  not to compete with the
Employer,  or  such  subsidiary,  is  not  made  under  duress and that it is an
essential  part  of  this  Agreement,  without which the Employer would not have

<PAGE>
 engaged  or  continued  the  services  of  the Employee.  Further, the Employee
acknowledges  that  this  covenant  not  to  compete  is for such good and valid
consideration  and  Employee  agrees that in the event of a threatened breach of
his  covenant  under  this Agreement, that any remedy at law would be inadequate
and  Employer  may  seek  injunctive  relief,  as  well  as  damages.
          (d).  That  in  the  event  the Employee is terminated by the Employer
after a change in control (as hereinafter defined) or by the Employer during the
pendency  of a potential change in control (other than for cause in either case)
or  by the Employee for good reason after a change in control, then the Employee
is  entitled  to  an amount equal to three (3) times his annual base pay amount,
calculated  as  the  average  of  the Employee's W-2 annual cash salary and cash
bonus  income  from  the  Employer  over the five (5) most recent taxable years.
Said  non-competition  amounts  are  to  be  paid  in  three  (3)  equal  annual
installments  without  any interest due thereon, the first installment being due
within  thirty  (30)  days  from  the  date  of  such  termination  and annually
thereafter  until  paid  in  full.  In  addition,  the  Employee  is entitled to
continued life, disability and medical insurance coverage for a period of twelve
(12)  months, paid for by the Employer.  Said non-compete payments shall prevent
the Employee from, directly or indirectly, owning, managing, operating, or being
employed  by,  participating  in  or  being  connected  in  any  manner with the
ownership,  management  and  operation  of  any business similar to that type of
business  then  conducted  by  the  Employer  or by any subsidiary for which the
Employer  is  then  actively  engaged for a period of 36 months from the date of
such  termination  of  employment  and  within  the  radius  of  twenty  (20)

<PAGE>
 miles  from  the  office  of  the  Employer,  or five (5) miles from any branch
office,  as  the case may be, within which Employer has his main office while he
is  performing  his services hereunder.  Further, that the Employee acknowledges
that  this  covenant  not to compete with the Employer or such subsidiary is not
made  under duress and that it is an essential part of this Agreement.  Further,
the Employee acknowledges that this covenant not to compete is for such good and
valid  consideration, the receipt of which is hereby acknowledged.  The Employer
and Employee acknowledge that any breach of this contract would cause damages to
the  Employer,  the  value  of  which would be difficult to determine.  For that
reason,  the  Employer  and  Employee  hereby  agree  upon  liquidated  damages
specifying  that  the  damages  that  the  Employer would incur as a result of a
breach  by  the  Employee  would be determined based on the present value of the
stream  of unpaid non-competition payments specified above.  In addition, in the
event  of a breach of the Employee's covenant under this Agreement, the Employer
may  seek  injunctive relief, as well as the liquidated damages set forth above.
          A  change  in  control  occurs  if:  (i)  any  person or entity acting
directly  or  indirectly  or  through  or in concert (other than persons who are
presently  on the Board of Directors for the Employer) with one or more persons,
acquires the power, directly or indirectly, to vote twenty-five (25%) percent or
more  of  any  class  of voting securities of the Employer; or (ii) the Employer
becomes  a  subsidiary  of another corporation or is merged or consolidated into
another  corporation.  A potential change in control occurs if: (i) the Employer
has  entered  into  an  agreement,  the  consummation of which would result in a
change  in  control; (ii) any person publicly announces his intention to take or

<PAGE>
to  consider  taking actions which, if consummated, would constitute a change in
control;  or  (iii)  any  person  becomes the beneficial owner, as defined under
Securities  and  Exchange  Commission  rules,  directly  or  indirectly  of  the
Employer's  securities  which represent nine and one-half (9.5%) percent or more
of  the  combined  voting  power  of  the Employer's then outstanding securities
entitled  to elect directors; or (iv) the Board of Directors adopts a resolution
to  the  effect that a potential change in control for purposes of the agreement
has  occurred.  A  potential  change  in control remains pending for purposes of
receiving  payments under the agreement until the earlier of the occurrence of a
change  in  control  or a determination by the Board of Directors or a committee
thereof  (at  any  time)  that  a  change  of  control  is  not or was no longer
reasonably  expected  to  occur.
          Termination  of employment because of disability, retirement or death,
or  by  the  Employer for cause or by the Employee for any reason other than for
good  reason,  will  not  result  in  the  full  payment  of  benefits under the
provisions  of  paragraph 7(d) above.  "Cause" is defined under the agreement to
mean:  (i) willful failure substantially to perform prescribed duties other than
as  a  result  of  disability;  or  (ii)  the  willful  engaging  in  misconduct
significantly  detrimental  to  the  Employer.  "Good  reason"  for  Employee to
terminate  employment  with the Employer occurs if: (i) duties are assigned that
are  materially  inconsistent  with  previous  duties;  (ii)  duties  and
responsibilities  are  substantially reduced; (iii) base compensation is reduced
not  as  part  of  an  across-the-board  reduction  for  such  executives;  (iv)
participation  under compensation plans or arrangements generally made available
to  persons  at  the

<PAGE>
 Employee's  level  of  responsibility  at  the  Employer  is  denied  except as
otherwise  provided;  (v)  a  successor  fails  to assume the agreement; or (vi)
termination  is  made  without  compliance  with  prescribed  procedures.
          8.  Addresses.  That,  unless mutually amended in writing, any notices
required or permitted to be given under this Agreement shall be sufficient if in
writing  and  sent  by  registered  mail  to  the  following  addresses:
          FOR  THE  EMPLOYER:
          Summit  Financial  Corporation
          C/O  J.  Randolph  Potter
          P  O  Box  1087
          Greenville,  SC  29602

          FOR  THE  EMPLOYEE:
          Blaise  B.  Bettendorf
          103  Cypress  Ridge
          Greenville,  SC  29609

            9.  Vacation.  That  during the term of active employment hereunder,
the  Employee shall be entitled to an annual paid vacation of three (3) weeks to
be  taken  at such reasonable time or times as allowed by the Board of Directors
of  the  Employer.
          10.  Employee  Benefits.  That  the Employee shall be entitled, during
the term of active employment hereunder, to those employee benefits currently in
place  for  the  Employee.
               11.  State Law.  That this Agreement is made pursuant to the laws
of  the  State  of  South  Carolina  and  shall  be  construed  thereby.

<PAGE>
          12.  Entire  Agreement.  That  this Agreement constitutes the sole and
complete  agreement  between the Employer and the Employee and it is agreed that
no  verbal  or other statement, inducements or representations have been made to
or  relied upon by the Employee and that no modification to this Agreement shall
be  binding upon either party hereto unless in writing and signed by each party.
          13.  Binding  Effect.  That this Agreement is binding upon the parties
hereto, their successors, personal representatives, legal representatives, heirs
and assigns (however this Agreement shall not be assigned by the Employee unless
the  Employer  shall  agree  thereto  in  writing).
          IN  WITNESS  WHEREOF,  the  parties hereto have signed and sealed this
Agreement  on  the  date  above  first  written.


IN  THE  PRESENCE  OF:             EMPLOYER:
                                   SUMMIT  FINANCIAL  CORPORATION
/s/  Karen  Dye                    By:   /s/  C.  Vincent  Brown
                                   Its:  Chairman
/s/  John  A.  Kuhne               And:  /s/  J.  Randolph  Potter
                                   Its:  President


                                   EMPLOYEE:
/s/  Sharon R. Wilson             /s/  Blaise  B.  Bettendorf
/s/  Sandra  Ridge


<PAGE>

EXHIBIT  23  -  CONSENT  OF  KPMG  PEAT  MARWICK



                         INDEPENDENT AUDITORS' CONSENT
                         -----------------------------


The  Board  of  Directors
Summit  Financial  Corporation



We  consent  to  incorporation  by reference in the registration statements on
Form  S-8  (No.  33-83538) Summit Financial Corporation Restricted Stock Plan,
(No.  33-94962)  Summit  Financial Corporation Incentive Stock Option Plan and
(No.  33-94964)  Summit  Financial  Corporation 1995 Non-Employee Stock Option
Plan  of  Summit  Financial  Corporation of our report dated January 22, 1999,
relating  to  the  consolidated balance sheets of Summit Financial Corporation
and  subsidiaries  (the  "Company")  as of December 31, 1998 and 1997, and the
related   consolidated  statements  of  income,   shareholders'  equity    and
comprehensive income, and cash flows for  each of the years in the  three-year
period ended December 31, 1998, which report  appears  in  the  December  31, 
1998 Annual report on Form 10-K of the Company.



Greenville,  South  Carolina
March  24,  1999                                    /s/ KPMG Peat Marwick, LLP